Strongerhead Weekly Financial Market Analysis 25 Mar 2013

We have to respect the trend, as it is still going up until prices says otherwise. This week, I would like to update last week’s analysis to have a feel of what the market would do in various time frames.

We do not trade using the long term chart. This is just an exercise to see the big picture, and to analyse its possibilities. Since 1997, there are 3 zones which I would call it R1, R2 and R3 where prices had twice turned its tide (be it corrections, or reversal). We are at R3 now, where prices are at the top of its price envelop, and RSI is near its top. Similar patterns in previous years suggest that there’s another possibility of a dip or correction or reversal. Nothing is confirmed until it is confirmed. But it is better to be ready for it then to be sorry. However, with the continuous money supply every month, and should all the money be pumped into the stock market, it is unlikely for the market to tank. And the fact that market seemed unthreatened by Cyprus scare is a sign of strength. I’m still a cautious bull with shorten trading time frame.

The monthly chart (not shown here) on the Dow and S&P, its RSI is still sitting at 78. It can go as high as 85 if the power of bulls is strong. Weekly charts show the trend is still going up although last week, prices took a breather from its overbought situation (base on price envelop and RSI).

We are in the middle of the river based on daily charts. Not the best area to place any bets, but it could still be a potential dip in the uptrend from weekly pattern. Be ready to stop out and get back in again to avoid large drawn down scenario.

VIX weekly indeed rejected RSI 25 zone and did a rally, with $15.50 as the resistance. On the daily, VIX price seems to be back in the range within the green box. If the bulls have legs, VIX prices should not rally beyond the green box.


Mid term view:
Trend is still UP. 18 weeks into the up leg.

Short term view:
Market has already dip last week but closed above its low on Fri. Doesn’t looks like it wants to come down. VIX is near top of the green box. If it breaks out and stays out of the green box, I’ll be wrong with my direction, and be ready to reverse.

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