Been a really funky week. Despite its wild moves, prices are back to near its last week’s closing price. I was right about the range, but I failed to make money out of it. The accuracy of the analysis does not matter. It is what you do when you are right or wrong that makes the cash register rings. Next week, would prices retest the 2007 high? Let’s hear what the market pulse has to say.
On the monthly chart, there is still some room before price reach the top of its price envelop. Once RSI reach extreme level (ie: 77 – 85), I believe the market is really at its top. Should any pull-back happen and caused the EMA to crossed, momentum will usually last for a month or two.
Weekly chart shows upward movement stalling. If the bulls are still in control, there’s room for price to hit 14,300 (Dow), and 1550 (S&P – short term resistance at 1530). When that happens, RSI should be at 80 level, in a very overbought zone. If bears are in charge, a pull back to 1480 or even 1430 is possible).
On the daily chart, prices are still sitting on resistance level. Prices must break and stay above this level for more potential upward movement.
VIX (fear index) weekly price EMA has crossed. Daily EMA is down, we will consider this a dip in an uptrend. Require to wait till next week for confirmation. Possible new range ($14.5 – $18/19) based on the 2nd green box I had drew on the chart. Prices now sit near the lower end of its range. If $14.50 hold, market is getting fearful.
VXX ETF for VIX experiencing the highest weekly volume since Mar 2009. This is usually a sign of a change of behaviour, in this case, favouring the bears.
Summary:
Mid term view:
Trend is still UP. 15 weeks into the up leg. A bit of room for prices to move to top of envelop in March. But trend is tiring and weakening.
Short term view:
S&P is looking to retest 1530 level. Failure to hold above 1530 would cause another sharp sell off (forming a short term double top). But with VIX at its low end of its new price range, Dow and S&P at its short term resistance, take the side that fails to hold its line.
Cheers
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NOTE: All information provided “as is” for informational purposes only, not intended for trading purposes or advice.
