Stock Incubator

[dalcindo]

Re: $COMPQ, NAAD, NAHL, TRIN - 36-Month, DAILY Chart:


As $COMPQ ventures into new yearly highs, it is now officially drilling into the resistance zone that should prove pivotal and tedious. In fact, I believe that this zone will represent a rite of passage for this junior index, before bulls gain confirmation that the US economy is back and running once again.

This period of anticipation is likely going to be characterized by two conditional scenarios. in the first scenario, the fundamentals develop positively in the short AND mid-term views, and the resistance zone cedes to a sustained consolidation. In the second scenario, the fundamentals are yielding to uneasy or short-sighted investors and falls short of the drilling power to resume a decline.

Either way, a decline is far more likely gain forceful momentum than any sustained growth, considering that only a handful of economies are expected to get "out of this mess". If China continues to relax its policy and manage its inflationary risk favorably (i.e.: without limiting its own domestic capital investment, consumption and growth), then the eyes will turn to the US for any indication of further growth. If the USD economy declines, I believe that China will sell off more of the US Dollar and accelerate a mechanism by which its currency will trade on different intermediaries than the USD. And this may spell the beginning of a new era for the Asian and world markets, IMHO.


The $COMP Chart:
Looking specifically at the graph below, the are several overlapping indicators, which taken as a whole, indicate some serious resistance ahead.


RSI, MACD, TRIN:
These three indicators are suggesting a likely reversal at the current level. RSI hit a new high as price head-butted into the resistance zone. Correspondingly, MACD pierced through its overhead resistance line, suggesting a bullish consensus support as we enter this new level of trading. If MACD steps and holds on to the resistance-turned-support level, then we may very well be into that first scenarioo alluded above, where consolidation will characterize that trading period, IMHO. If that support breaks, it may indicate a general failure from the market to deal at this expensive level relative to the risk in total fundamentals.

Additionally, TRIN breached into a new low, here too explicitly stating that confidence is relatively high at this new level. but this may be temporary, and a sustained residence UNDER the prior support may provide the visual support to express true market confidence, IMHO. Until then, the trading level remains tentative, speculative and risky, for reversals remain higher probabilities than continuation of any bullish trend.


NAAD, NAHL:
Nasdaq new high/lows and advance/declines lines in the chart are indicating the same resistance expectation. While the NAHL is smoothed and not as clear about resistance levels, the NAAD line (pink) is clearly indicating a resistance level right at the current trading level.


OVERALL - Again, all indicators have culminated to a point of congestion, whose denouement is expecting to come when the fat lady Fed steps onto the stage and sings her highly anticipated rate song. Speculative minds on the street are setting this event to occur sometimes this summer. Until then, the opening scene belongs to even battle between bulls and bears.

- Dalcindo



$COMPQ, NAAD, NAHL, TRIN - 36-Month, DAILY Chart:


- Dalcindo