Tuesday, July 30, 2013

ImageAs the markets bide time deciding its intentions, the Keltner/Bollinger bands (K/B) are confirming the S&P 500 (SPX) is coiling for a breakout move up or down. It is also showing up on the Nasdaq Composite (COMPQ), and the Dow Industrials (DJI). Since the K/B is on the 4 hour chart, It obviously does not have the same punch as a K/B showing up on the monthly but it is still note worthy. By the way, a monthly K/B is fairly rare and the last time it triggered was July 2012 when the SPX was trading around 1400. The bear market triggers are short in duration 1-2 years but the last bull market trigger was back in 1995 and lasted 5 years before a major reversal.ImageImageA look at the Japanese index proxy, Japan iShares ETF (EWJ) and Brasil index proxy, Brasil iShares ETF (EWZ). They both have similar themes as they are bounded by solid support and resistance. If the EWJ can produce a TD Buy Setup with a 9 count above the 10.84 TDST support, it will give support to the upside once again. For EWZ, it has been the antithesis of EWJ but the criteria is also clear. The 40 level is support and emphasized by the 41.52 TDST level. For reference, EWJ weekly has just recorded a bearish price flip and the monthly is on a unperfected 9 count TD Sell Setup. The EWZ weekly TD Buy Setup was on a 8 count but interrupted with a bullish price flip last week. The monthly is on a TD Buy Setup bar 4.

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Any break above previous high around SPX 1700 or under previous low under 1680 could produce a short term momentum run as suggested by the K/B coiling on the 4 hour chart. For now, there is really nothing to do but wait until tomorrow when Wednesday through Friday are the designated market moving days. (updated intraday) 

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3 Responses to Tuesday, July 30, 2013

  1. Bernardo Franco says:

    Very good.
    Thank you.

  2. Suren says:

    The idea of all these technicals counts and TD analysis is to predict the next market move. Tom DeMark called for a top in May (DEAD WRONG) and still the market is chugging along. How can one trade looking at these TD intepretations when forecast is completely wrong or absent to predict the direction of the market?

    • Art says:

      Good points. DeMark only had one good publicly made call this year when he called the first Shanghai bottom. TD methods are just his attempts to reverse engineer the markets and his major breakthrough came when he identified a commonality between these 9 and 13 counts as turning points or at least a temporary hiccup. Timing the market is always tough so these TD methods are simply probability tools. Knowing what it can’t do is just as important as what it can do.

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