Archive for November, 2011

Market Turning Points | Andre Gratian | 2011-11-13

Posted in education, technical analysis on 2011-11-13 by Strategesis

From Safehaven.com:

The rally which started at 1075 in early October had a 218-point rally to 1292 in less than four weeks before pausing. That’s a lot of strength which has a lot of former bear market advocates beginning to change their minds. After a ten-day correction which retraced less than .382 of the uptrend, it looks as if the SPX may be ready to extend its move to the low 1300’s (see pink box on the chart below).

That would be the logical target. Several trend lines which, collectively, should provide some resistance come together in that area, and they coincide with a P&F count derived from the base which was formed just above 1220.

After this target is reached, it should be followed by another correction, but that is not likely to be the end of the move. Besides the obvious strength in the index, the consolidation which started in early August and lasted into early October created an enormous accumulation base which can lead to higher prices, perhaps even new index highs.

That base has also proven to be an area of strong support. The pull-back from 1292 could not even penetrate the higher layer of the congestion level, and the consolidation formed at its very top. On the Point & Figure chart, that accumulation base is clearly far more substantial than the distribution pattern that was formed at the 1371 top – although it does not look like it on the bar chart. One of the P&F tenets is that when an accumulation base is bigger than the preceding distribution top, the next move should carry to a new high. We’ll see if this holds up in this case. In the meantime, as long as we don’t see some real weakness coming into the market, it is probably best not to be too bearish.

Continued

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How to trade this headline-driven market

Posted in market analysis, trading plan on 2011-11-06 by Strategesis

From Safehaven.com:

The current price action in the marketplace pales in comparison to the world’s geopolitical tensions and deteriorating social mood. In my trading career, I have never seen the price action in the indices react so violently to intraday headlines and rumors. Risk is high and the types of traders profiting from this market are day traders and very short term traders with trades lasting just a couple hours to 24 hours in length. Aggressive trading which small position sizes is all that can be done right now. This is not meant to be investment advice, but more as a function of the market environment in which we find ourselves currently trading within.

Continued

Something is about to break

Posted in liquidity analysis on 2011-11-06 by Strategesis

From Safehaven.com:

When Dexia was nationalized I said the clock was now ticking. Counterparty risk was the new threat to the global economy. When confidence is gone the system simply shuts down. What does that mean though? How do you measure confidence or lack thereof?

Simply look at where cash is going. Recently released data shows a record jump in the foreign reverse repurchase agreement balance held at the Federal Reserve (first reported by Zero Hedge on November 3).

In just one week a whopping $43.2 billion in liquidity was removed from the system and deposited at the Fed. That is a 53% jump in the total balance from $81.3 billion to $124.5 billion. The last time such a move happened was the week of September 24, 2008 when $44 billion was removed. At the height of the 2008 financial crisis the total balance held at the Fed reached $107.8 billion.

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Market Turning Points | Andre Gratian | 2011-01-06

Posted in education, technical analysis on 2011-11-06 by Strategesis

From Safehaven.com:

The market appears to have survived a steep correction and it looks as if the uptrend is still viable. This is perhaps best observed on the weekly charts. To resume its downtrend, the SPX would have had to close decisively below 1220 on a daily basis (but even that would not guarantee that we’d be on our way to making a new “bear market” low). Instead, it bounced back up and started a near-term uptrend which retraced .618% of the decline. It opened down on Friday, but could not follow through with the morning weakness, and closed on the high of the day. This is good technical action which suggests that there is more to come on the upside before the rally (which started at 1075) has reached its zenith.

Prices have been volatilely connected to the Eurozone situation. Now that the plans for a referendum have been cancelled, and the Greek prime minister has squeaked by on a vote of confidence and intends to resign, temporary stability has returned which may allow the SPX to reach its final rally target of 1310-1320.

In fact, the weekly charts suggest that the indices are just breaking out of their last intermediate downtrend, and they may have some distance to go before the new uptrend is complete. We’ll start by looking at a weekly chart.

Continued