The Dow making what appears like a perfect topping pattern, weakening in the uptrend is show with the leveling of the moving averages and the incapability of the index to make a new high in the middle of September. However the down move has not started, for that the index must breach the 14800 level decisively, if that is to happen 14000 can be the bottom.
Although must of the time representative of the complete market, the Dow is only 30 stocks, to form a more thoroughly frame of mind let’s look at the complete market and groups.
The SP500 is in a long, maybe too long, continuation pattern, sideways movement is to the upside, and the Mas are aligned trending up. New Highs – New Lows were stalled around 1710 so it’s fair to say that a close above that level will confirm the break of the continuation pattern to new highs. My long term view as of this week is that markets topped or are in the process, so if I am to speculate with longs it will be very short term, 5-10 days max.
Technology, Financials and Energy are almost a 45% of the SP500, Financials trading inside a no-interest outline makes me indecisive about the markets since I like all groups to coincide in the trend, however that symmetrical pattern can go either way with the probability on the upside.
A closer look at financials with my support line at 367, it could happen that if the supply line is broken at around 376-379 the movement lose strength and the index reverse again, so it is really a difficult pattern to trade short term.
Tech is making new highs and lows with the inside trendline breached and recovered this month, the volume is to the upside. Nothing suggests that tech won’t make new highs again but it pays to remember that the movement must certain will be short term.
Oil & Gas presents the same shape.
Forecast: No Forecast here just reactions, let’s wait for this week action before opening any position, if you follow me, I try to take 50 or 60% of the movement so I wait for confirmation before entering, as they say around here, yo compro a 1 y vendo a 2 y me conformo con ese 1%.
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- Erick Stern
- I am a civil engineer who likes charts, to me, speculating in the markets is both a hobby and a second profession and in my view the stock market is the most honest environment, since it is only your knowledge and preparation that matters. I live, and work in the construction industry, in the Dominican Republic. I read and answer all my mail so please feel free to write firstname.lastname@example.org Thanks, Erick