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Equity Market Update
Submitted by Nic Lenoir of ICAP
As always, we start with the Dax, a smaller market bt geometrically and technically a much better indicator or the market than the S&P. On the weekly chart we are still in a bearish scenario where we retraced 61.8% of the sell-off of 2008/2009, and we would now be entering anoher major bear move.
Breaking it down since the recent tops, after we reached the 5,389 target on the downside we had recommended trimming or cutting short in a rebound that we thought would take us to the 100-dma at 5,740/5,725. There we advised both tactically and medium term short positions again (See daily chart).
The question is now how to manage positions on the downside. We have reached the 61.8% retracement of the rally from 5,389 to 5,745 but divergence is relatively minimum in terms of momentum indicators. There are two possible alternate counts listed on the 180-minute chart (bearish) and 30-minute chart (bullish). The bearish case considers the rebound from 5,389 as a corrective motive (abc) rather than a bullish impulse, and since we failed breaking the 100-dma resistance which coincides with the 50% retracement of the sel-off since the highs the market should press on lower and go make new lows in short order. The bullish case pictures the rebound as an impulse and since we retraced 61.8% we should be on the cusp of another leg up taking us back to 5,740 (61.8%), or 5,890 (100% AND top of a what could be the second shoulder of a H&S on the tops, see weekly chart). Our medium term view is bearish, so we think that if you haven't trimmed your shorts at 5,600 these levels could be a good point to do so, and move a trailing stop on a daily close above 5,670, which preserves a gain on the rest of the position. Should get back to 5,745 and 5,890 fresh short positions will be re-intiated there with great asymmetric risk profile.
Drawing on these conlusions, the S&P future has not broken the equivalent of 5,600 for the Dax which lies at 1,076. If you have shorts on from the target sell-zone at 1,100/1,107 we would recommend partial profit taking between 1,084 and 1,076, moving the trailing stop down to 1,095. We notice that we have a H&S pattern on the 180-minute chart on the recent lcal highs at 1,112, so that comforts a bit my overall bearish outlook. However recent experience for the 10Y treasury note futures and Bund futures where H&S patterns were brutally invalidated (also note the noise introduced by the roll) keeps us cautious.
Finally as side note, we had recommended selling AUDUSD at 0.9030 and the market rejected indeed the 50-dma. This trade is obviously in accordance with a bearish equity outlook. We now watch 0.8767 as the support that must be bypassed in order to confirm that further downside is on the way short-term.
Good luck trading,
Nic
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Market pop on volume. news anyone?
I tis Thursday and snowing in NY. Is there any better reason to ramp the market?
It is Thursday and it is snowing in NY.
Can you think of a better reason to rally the markets?
and right back up, magic bid just on time, push us right back to 1098. good chance we end unch or even positive today.
this time i bought some upside, fool me once, shame on you, fool me 28,745.3 times... well then... shame on me.
Funny
That looked news driven. volume was huge. Those suspect drift ups usually occur on subpar volume.
Sudden optimism in the markets no doubt. I think it quit snowing and everybody is hiring again.
EUR was serious strength across the board against all currencies except USD. I bet it was a greek bailout rumour. keyword= rumour. Those JPM SPY green button boys sure have twitchy trigger fingers...
market pop=
-run markets up day before
-let markets down on auction day
-panic investors into auctions
-auction success
-banks pour money into market on a buying binge knowing they get cash for the treasuries they just bought.
-Sell bonds on open market
-Fed buys open market bonds
-inject more money into the banks
-more money to gun markets
amazing money making machine!
This should be written in poem format and framed hanging on the wall next to the computer of every aspiring trader.
+100
Gee let me guess why there is a pop in the market. Could it be GS and their Hal the monolith stock pumper? Nah, can't be.
Agree, and pump up the market to lessen or stop a selloff from getting out of control.
HEY TD....
It would be interesting to see a comparison
of new common stock issues year by year....
Also....it would be of interest to note the cost of
bringing companies public.....relative to their local markets....
What is highly likely is that the cost of common equity will be going up in the US to the degree such that the equity markets may be centered at the most efficient domicile....
I find this to be of particiular interest because an exchange has just become softwware....and can/should be located where the costs and maintenance are most efficient....
This would be very interesting.....particularly since there are an increasing number of taxing populists that are getting trigger happy ....
I think that that these populists should be given a new awakening as to what really confronts their ....cheap....directionless ....nonqualified blabber....
ie They could very well be losing their exchanges as well....
It is imperative....particularly now....that the US becomes more efficient....not less....
From the 85 year old market watcher (Richard Russell):
"My belief is that the 2009-2010 upward correction is now in the slow and tedious process of breaking up. For that reason, I have suggested my subscribers to be out of stocks and on the sidelines. Because the primary bear market has been halted or bottled up since March 2009, I suspect that the coming bear leg will be particularly vicious. It will be brutal because the Fed has already "shot its load," and further activity from the Bernanke Fed will be limited and fiercely opposed by many."
Yeah, he has been saying that like a broken record since March . Oh yeah Buy gold.....get another service
Your disrespect and passing off of the Dow Theory is telling. One doesn't need to believe in it, but it is to be respected and for the wise market participant it is one to pay attention to because......many people do.
Looking for another 180 degree handbrake turn with 60mins to go...backwards is the new forwards lol
Shameful....Burnanke sure knows how to squeeze the jam out of a kids doughnut
So you guys think this was news driven yes, very good. mission accomplished
bi-polar markets
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