Strongerhead Weekly Financial Market Analysis 28 Jan 2013

5 straight days of bull run. If you can’t beat the bulls, join them. Is that what the bears are doing?

On the monthly chart, trend is still up. RSI beginning to reach overbought. I’ve highlighted the price zone that pulls back when RSI hit overbought. Not sure if pull back is going to happen. Remember, if it does, and EMA stills up, dip in up trend. If EMA crossed, bigger correction in the making.

On the weekly chart, prices near top of envelop. RSI reach overbought. Remember, prices can stay overbought like in 2012 Jan – Apr. If that happens, we’ll have another “Sell in May, Go Away”.

On the daily, No sign of weakness as yet. Except RSI is in overbought zone. Prices are hovering at the top of the envelope. I have backdated the chart to slightly over a year ago, where we see a similar pattern (highlighted in blue). Let’s see if this run is similar to the previous one.

VIX (Fear index) monthly, price is very low, but not reach oversold yet.
VIX (Fear index) weekly, MACDH move lower, showing strength to get lower.
VIX (Fear index) daily, RSI bounce on the Friday. Let’s see if $13.15 would serve as resistance. If so, then, I would be right to say that VIX might be forming a new range at the lower band.


Long term view:
Trend is still UP. Dips without EMA crossed = buying opportunities if it happens.

Mid term view:
Prices beginning to reach overbought. Remember, prices can stay overbought for a while.

Short term view:
When all RSI are in overbought and near top of price channel. Let’s see how long the price can stay at the top of the price. In such instances, I would only add to position for very short time frame, if i catch a short term pull back. If not, I would profit take on my long. I am not saying the market will not continue to go up higher. I am just being defensive when everyone is greedy.

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