Strongerhead Weekly Financial Market Analysis 15 Oct 2012

The VIX did rallied and Market made a pull back. Next week market performance would determine if the market has finally turned its tide.

Dow and the S&P500 had closed below the low of its previous two sessions. It is often a warning sign. Most people would have been stopped out by now as it is a common practice to place the stop loss at the low of the previous two price bar. MACDH has signed a divergence favouring the bears, as the bulls has signalled a lacked of strength compared to its Mar/Apr’s rally.

Things to watch out next week for sign of bear:
1. EMA confirms the cross over
2. DOW breaks 13250 level, and S&P 500 breaks 1425 level with ease
3. MACD ticks down into negative territory
4. RSI hits below 40

Things to watch out next week for sign of bull:
1. Prices break all support level but close way above its low. Which means none of the above 4 factors would be crystalised.

Dow and the S&P500 daily is in ST downtrend, and is in oversold territory. There’s a possibility of a rally after price reaches in oversold zone. But prices is not deep into the oversold zone which means, there could still be room for further drill down. Should prices breaks all support level, it should create a rally. If the rally does happen, here’s what to look out for:
1. If the rally is strong and trapped all who shorted the price, this is sign of bullishness.
2. If the rally is weak, and goes near or below the low of the week, it is just a relief rally.
3. If there’s NO rally, bear is in control.

VIX (fear index) did a rally from its low. The MACDH div worked. The support line is still holding. On the weekly & daily, VIX is still moving sideways, but price is at its pivot point. If Daily VIX RSI breaks above 65 and stays above, causing the weekly to do the same, and EMA confirm the cross, bear is in control.

Mid Term View:
Still up, but market is sitting on its fence between the bull and the bear. Watch out for the signal next week to confirm if market has changed its tide.

Short Term View:
Downtrend. Although oversold, but still have some room for further drill down before any rally takes place (if any).

Watch out for all the signs to gauge if we are early stage of down (for bears) or just dip on an uptrend (for bulls).

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