Archive for August, 2010

This is the update of my Aug. 23rd post.

Last week I said we needed to watch so see if price would stay above, or break below, the marked weekly support levels.  In the chart here, we see that this past week there was a definitive break below.  But, Wednesday through Friday, it seemed to have halted its decline.  There are no significant Midas curves in the vicinity of where it halted, so in this case, we have to look to other, traditional support/resistance methodologies for guidance.  Overall, the Midas curves are more plentiful and robust, but occasionally, such as now, others are needed.  We see that price halted at the horizontal support level defined by the May 25th low, and indicated on this chart here by the horizontal gray line.  So, at least for now, the decline on this short term timeframe has halted.

So far, price is remaining far below any of the resistances above it, so there’s no indication, so far, of a trend reversal.

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This is the update to my last post, of Aug. 14th.

In my last post, I said it was critical to watch how price behaves in the coming week w.r.t. the S1 level.  Now, on this new chart posted here, we see  that three times last week price penetrated S1, and on Friday the entire day was below S1.  And between those two times, price went up to S3 and turned down from it, S3 now acting as resistance.  So, we have price breaking support while holding resistance, the classic Midas definition of a downtrend.

In my last post I identified two timeframes within this one daily bars chart, the several weeks long one and the several months one.  The breaks below S1 last week show that we’re still in a downtrend on the several weeks’ timeframe, and in just a consolidation on the few months’ long one.

On Friday, price went down to, and bounced up from, the weekly support level marked there.  So, this is what we need to watch in the coming week.  If price lifts off this support, then a new, intermediate term (weekly bars chart) uptrend may be starting.  But, if price goes below those weekly support levels, then we’re simply in a downtrend on that intermediate term timeframe.

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This is the update of my Aug. 9th post,

In my last post, I said that the uptrend was weakening and may have topped, and indeed the market fell sharply this past week.  Price fell straight through both S3 and S2 while remaining below any resistance curves.  This is the Midas definition of a down trend – breaking supports while holding resistances.  The uptrend that was broken is the very short term one that was being followed by that three-fold hierarchy of support curves – S1, S2 & S3 – a timeframe of a few weeks or so.

Within this daily bars chart, which I have loosely called The Short Term, there is room to identify two different timeframes – a very short one of a few weeks, and a somewhat longer one of a few months.  Right now, we see that the very short term uptrend that started July 1st has ended, and it looks like, on this very short term timeframe, that a new downtrend may have started.

But look at what happened last Thursday.  Price gapped down, but came to a screeching halt right at S1, and on Friday it consolidated there.  Midas technique tells us that when price comes down to the S1 and doesn’t go below it, that indicates that we’re still in an uptrend, but on a somewhat longer timeframe.  So, we had a completed one-month uptrend within what may still be an uptrend on the several months timeframe.

In this coming week, how price behaves w.r.t. S1 is very important.  If price rises off S1 without having penetrated below it, that would indicate that we’re in an uptrend on the several months long timeframe.  And indeed if one wanted to trade on this timeframe, a rise off S1 would be a good long entry, with a stop just below S1.  (Caveat:  See my disclaimer!)

But if, in this coming week, price breaks below S1, that means that on the several months long timeframe, we’re just in a consolidation, one which actually started in June, and is defined by that gray horizontal line.

In future posts, I’m going to pay more attention to the two different timeframes that can co-exist on one chart.

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This is the update of my July 31st post.

The first chart here is the short term, daily bars, chart of the S&P 500.  We see that this past week, price broke up through R1 (dotted), but stopped and turned down at a curve I’m calling R1 Alternate, which is launched from the April 15th high, which preceded the April 26th high.  Although one might not think that this alternate curve is very important, we see that it did perfectly capture the April 29th pullup in price, which establishes its importance.

Last Friday’s candle was a doji hammer, which bounced up off S3, the latest S curve in the hierarchy of support cuves tracking this current uptrend.  This implies there might be some strength in the next day or two.  So, we may see price challenge R1 Alternate again.

In the upper pane is the so-called Money Flow Index, which is really the volume weighted RSI, on which trenline analysis is often a leading indicator.  After having just touched overbought territory on July 27th, it has now formed a negative divergence with the price, an indication that the current uptrend is weakening.

The second chart here is the update of the accumulation/distribution condition – see my July 31st post.  Here we see that the gap between the down days and up days is widening, an indication of weakening market conditions.

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