Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Distribution Day Friday?

Stock-Markets / Stock Markets 2010 Mar 20, 2010 - 10:18 AM GMT

By: Piazzi

Stock-Markets

Best Financial Markets Analysis ArticleFriday had all the makings of a distribution day. It, however, was an OpEx day and we can’t know how much of the activity were market’s way of punishing late buyers and rally hopefuls.  Monday, and Tuesday’s action will tell us if this was yet another quick selloff buying opportunity or the beginning of a pullback/correction.


This is a weekly chart of the index

Notice that index has risen all the way to the middle of the channel, MACD’s at a kissing point, and RSI has entered overbought region. It is not very clear from this chart but 34 and 89 EMA are also kissing. Index is at a stage where it needs a good push (aka money on the bid side). It needs to receive money early next week or we may see more profit taking and perhaps softness/correction.

To the upside, there is some resistance around 1200.

To the downside, there is good support from MAs , but index could easily drop, on this weekly chart, to the neighborhood of 1120 before meeting its first MA.

This is daily chart of the index

First off, look at that RSI peak!

 I leave it to you to find out how many times in the past we have had that kind of peak and what the consequences were during the following days and weeks.

Index is at a new high for the year. It has a very positive technical profile. A first line of support is around 1146 pivot. Below that, there is ample support from a host of MAs, and technical levels. That being said, index looks overbought, daily price has put a bit of distance between price and MAs. Although overbought can stay overbought for a long time, I do not think it prudent to establish a new long position at this point. For positions from lower levels, one may need to re-evaluate based on one’s risk parameters and tolerance.

Friday was a down day on poor breadth and above average volume

I mentioned that McClellan Oscillator looked like it was setting up a negative divergence in overbought areas. It did that and dropped sharply to neutral.

This is 60-min chart of the index

First off, the Inv. H&S that I first discuss on March 2, has worked very well – congratulations to those who took it. It is almost fully priced (pattern is spent) and I will remove its labels. But I shall keep the neckline as a viable technical support.

As price starts a move, we start examining possible paths that it might take. Later, we evaluate possibilities and decide on what path may be more probable than others.  We then monitor the progress and adjust, or abandon if necessary. One tool than can tell us if a perceived price path is indeed behaving as it should is a well-constructed channel.

Notice the channel on the 60-min chart above. I started it on February 26. Since then, I have monitored price movement and commented on how I would have liked it to behave within the channel. On Friday, price hit the top of the channel and pulled back. First order of business for bears should be to bring the price down to the lower half of the channel. They need to do a lot of things to steal the show, but a move into the lower half of the channel is definitely a start.

We might have a completed wave pattern for a wave 1 up. It may also be argued as a wave B up.

Something I have noticed Elliot Wave does to some of its practitioners is that it gives them a sense of being right about the future path of the market. That sense, when turned into certainty, can frame the practitioner into a corner right where walls meet – hard to find a way out unless one does a complete turn and look the other way for probabilities. But looking the other way is hard when one is certain of the path the market should take in the future. With so many trying to tell the market what it should do, the ultimate contrarian play, IMO, may be to let the market tell me what I should do ;-)

As my friend Bill S. puts it: “E-wave when practiced correctly and in an unbiased manner is merely a tool for providing a probable roadmap with probably being the key word. It is all about probabilities not certainties, and one must use other tools to assess those probabilities.”

That is exactly what it is, a tool, a superior tool, I think, but a tool and no more.

OK, we have the possibility of a complete pattern. If so, the high of yesterday should ideally not be exceeded until the correction has run its course. That having been said, 60-min chart is oversold and we may see a bounce.

One day of selling on an expiration day does not break a market. It might however be a warning that more selling may follow to, at least, cool things off. So, I shall evaluate my levels, and watch for more signs of distribution.

This is still a bull’s market, so, I shall pay more attention to what bulls do as they have the upper hand, the capital, and the confidence, and less to what bears say – watch for signs of distribution!

There were talks of 1987 crash and comparisons made between now and then. All I can say is that it is dangerous to start a new long position in an overbought market. As for existing position, one must evaluate one’s position and take appropriate risk mitigating actions (hedging, insurance, re-balancing, profit-taking, whatever). That is just good discipline and has nothing to do with talks, innuendo, fears and trepidations of others. As for the crash, if it happens, some will take credit for having known it all along, if it does not happen, they will move on and tell us other stories.

Support is at 1148 and 1136. Resistance is at 1168 and 1177.

Long term trend is up. Mid-term trend is up. Short term trend is up (a move below 1140 may change that).

Have a Nice Week!

By Piazzi

http://markettime.blogspot.com/

I am a self taught market participant with more than 12 years of managing my own money. My main approach is to study macro level conditions affecting the markets, and then use technical analysis to either find opportunities or stay out of trouble. Staying out of trouble (a.k.a Loss) is more important to me than making profits. In addition to my self studies of the markets, I have studied Objective Elliott Wave (OEW) under tutorship of Tony Caldaro.

© 2010 Copyright Piazzi - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in