Strongerhead Weekly Financial Market Analysis 10 Sept 2012

The first two trading day did dipped lower, however, it started to rally on Thurs instead of Fri. Thurs’ rally rekindle the strength of the bulls. We have to give the bulls the benefit of the doubt that this trend is going to continue. My doubt for the bull run had paid the price as I got into VXX on a pull back.

Next week’s outlook is going to confirm the strength of the bulls. Let’s take a look at the chart.

The Dow and S&P are slightly off tune, although generally, they are in the same direction (Uptrend). Thus, i have decided to study them separately.

Things to watch out:
– The Dow is near its previous high. Possible double top.
– RSI has reached overbought status. On 4 occasions, when Dow hit overbought level, it tends to make a dip, except for one occasion marked in green rectangle.

SPX on the other hand has broke above its previous high. Things to watch out for:
– RSI is in overbought level. It has made a dip on 3 of the 4 occasions circled in red, except for one occasion marked in green rectangle.
– Price must stay above its previous high level.

On the daily charts, current prices are in the overbought zone base on RSI. Dow & SPX have made a dip 6 out of 7 occasions, except for the period marked in green rectangle.

Weekly VIX is back on down trend, with support near $13.50 range.
Daily VIX is back on down trend, sending price into oversold zone based on RSI. VIX has rallied on 6 occasions.


Mid term view:
Market is on an uptrend.

Short Term view:
The prices must not break below its previous high or we might experience a false upside breakout.

3 weeks ago (,
I posted that “When everyone believes the market is going to tank, usually, the market will does the opposite. Only when everyone feels the market is going to go up, it would then come down. I’m watching the general sentiments for ‘signals’.”

This is probably it, the market should rally to suffocate the bears. As soon as most bears showed their white flag, and many others are convicted that the bull run has more legs and jumped into the bandwagon, I believe the market will make a dip. I believe it might happened when VIX hit below $13 range.

NOTE: All information provided “as is” for informational purposes only, not intended for trading purposes or advice.