Stock Incubator

[dalcindo]

Analysing the recent CRASH: $SPX, $COMP, $INDU, $NYA, $RIFIN :

A very quick interlude in my vacation from posting and charting to comment on the recent market "crash", which various authorities are still probing as to its cause - Have they even considered technical influence, by chance?

Below are charts that I have produced and shared publicly time over time where channels, trendlines and indicators are literally framing the recent market high, fall, and its ultimate support. Considering that anyone could have drawn the Fib levels and channels based on historical high/low extremes, then NO credit goes to this author, but a firm statement in support of technical analysis's amazing powers.

As a hard-headed technical analyst, I would refer the reader to my public list on StockCharts.com, where channel, as far back as NOV 2009 had delineated a top-most border, at which the "crash" occurred.

Additionally, recent update in the charts, where significant Fibonacci levels were traced, also correlate with the exact level at which the "crash" occurred.

Finally, some other channel have also provided with their respective lower borders, at the precise point where the "crash" stopped.

Below are a sample of the charts in reference. Feel free to peruse on the public list linked below.

All this to say that technical analysis retains an amazing power to frame market tops and bottoms, whereas the skill in the analyst is to be able to draw lines and figures that help construct a path of the underlying momentum.

I am thrilled to say that technical analysis provided by the weekly and monthly charts has been able to remain in sync with market fluctuations, however dull or wild they may be at times.

The purpose of this entry is to influence the fundamentalist towards technical analysis. While a combination of both fundy and techy may provide a balanced position, there still remains the fact that technical analysis alone "absorbs", or discounts the news into its various price-based expressions, in the form of "linear rumors", which the technician can count on. In contrast, once the fundamental news is released, the price is already off to another rumor - Hence: "Buy in the rumor, sell on news".

I will return to my sabatical from charting/analysis, wishing you my friend enduring health and wealth.

- Dalcindo


$MID ($SPX) - 10-Year, Monthly Chart:
Note here how the upper border of channel drawn last 13 FEB 2010 provided the top-most high prior to price decline. Also, note how 5,9-EMA remain in a bullish spread:



$SPX - 10-Year, Monthly Chart:
Note here the validation of Fibonacci's 61.8%:



$SPX - 36-Month, WEEKLY Chart:
Note here the convergence of downtrend and uptrend channels' respective lines.



$COMPQ - 29-Year, MONTHLY Chart:
Here, the chart spans over the rather long time period and channels remain uncompromised. Secondary indicators have been oversold for sometimes and demanded some technical relaxation in the price level:



$INDU - 10-Year, MONTHLY Chart:
Resistance zone and Fib level were laid down last march 2010. Price got stumped right at the Fib level as expected on a purely technical basis. Anyone could have drawn that chart:



$INDU - 36-Month, WEEKLY Chart:
Here, a quich insert within the chart stating last 23 MAR 2010 that one should expect resistance at the significant Fib level. Please, note how the most recent reaction brought the price at or above the 50% level, suggesting significant support at 10340:



$NYA - 10-Year, MONTHLY Chart:
Here, bearish channel drawn on 23 MAR 2010 received further validation just prior to price decline. Note how the EMA's are valued at Fibonacci numbers, and recent fall gained support at 144-EMA:



ONEQ - 36-WEEKLY Chart:
"Crash" found support at this significant channel BOTTOM drawn in JUN 2009!



$RIFIN
here too, "Crash" found at support at channel BOTTOM:



- Dalcindo