Archive for June, 2010

This is the update to my June 12th post.

The latest uptrend started on June 8th, went up to R2 and turned down, and two days ago, it broke below the new S1.  This means that uptrend is definitely over.  We see, in the upper pane of this chart, that the MFI (the volume weighted RSI) didn’t even get into overbought territory before turning down.  I think this means that for now, we’re in a sideways consolidation.  A new trend wouldn’t be definitively indicated unless and until price breaks out of the range established by the June 8th and June 21st trading.

On the intermediate term (weekly bars chart) and long term (monthly bars chart), we’re still in new downtrends, with nothing much changed on those charts since I last updated them.

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This is an update of my June 1st post.

This past week, price came down to the support at the low of May 25th and rebounded, and is starting to break resistances.  This is the Midas definition of being in a new uptrend.

Also, notice in the upper pane that the Money Flow Index (the volume weighted RSI) has formed a bullish divergence with price, and has broken its downtrend line and then supported on the other side of that line.  This is bullish.

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The markets this past week have continued in the trends as I identified them in my posts of May 31st and June 2nd.  So here, I’m updating my post of May 2nd; you should see that post and it precedents for definitions of the indicators I’m displaying on this chart.

This chart is a continuation of the chart I showed on May 2nd, the only difference being that, in the upper pane, it’s 33-day moving averages instead of 22-day.  This somewhat longer averaging period smooths out a lot of random volatility without significantly increasing the lag of these indicators.

We see that distribution really got underway last November, and has continued since then.  When distribution accompanies a rising market, that’s a leading indicator of a market reversal.  However, it gives us no indication of timing.  It simply told us that the “smart money” was distributing out of the stock as the uptrend went into its final stages.

The market has been in a clear, strong downtrend (short term, daily bars) since late April, and along with it, distribution has been increasing in intensity, meaning that it’s now in sync with the trend.

When this downtrend eventually gets to its later stages, a leading indicator of its end will be the appearance of accumulation (green above red, MVPT diverging upwards from price), or, at least, the disappearance of distribution.  But there’s no hint of that now, meaning we’re in the strongest part of the downtrned.  So, hold onto your hats and enjoy the ride down!

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This is the update of my May 17th post.

In the short term, daily bars chart, the S&P 500 is still in a downtrend since it has been breaking supports while holding resistances, which is the Midas definition of a downtrend.

It is possible, though, that this downtrend may have bottomed last Tuesday, the day of that classic Hammer candle which often marks a bottom.  Furthermore, that day price bounced up off a relatively minor calibrated support curve.  For another indication, look at the top pane of this chart, the Money Flow Index, which is really the volume weighted RSI.  It is well known that trendline analysis done on the RSI itself can often be a leading indicator, and here we see that its down trendline (blue) has been definitively broken to the upside.

We won’t know for sure if this downtrend has ended unless and until price breaks above R3.

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