The market did what we have expected in baby steps fashion. Moving up the ladder at small baby pace. Will the market be doing the same coming week. Let’s take a look at the chart.
As of last week ended 17 Aug 2012, the trend is still UP. It is just inches away from reaching previous high. Base on price action, we need to give the trend the benefit of the doubt that the uptrend is still intact. But one got to stay defensive to protect your position in the financial market consistent especially when you smell something fishy. two reasons to be defensive:
1) Although RSI is showing the trend is up, but is in its overbought zone. There have been FOUR occasions where RSI hit overbought zone and which signal a correction is due. However, the signal just got into the overbought zone, which means there might be some room to run before it is very overbought.
2) Be mindful of a double top.
Similar to last week’s chart, there’s not much differences, except that prices have inched up a little further, and indicators is moving deeper into the overbought zone.
VIX is still in downtrend for both weekly and daily chart outlook. But whenever VIX hits oversold zone, it will make a rally. This has happened to VIX several times on the weekly chart.
Summary
Mid term view: We have to give benefit of the doubt that market is still up.
Short term: Market is at the high now. I believe there might be a possible knee jerk reaction when the market reaches its previous high.
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’.
