Weekly Signals

[Abby Justa Colon]

With most of the weekly indicators now pointing up, we will be playing the long side on pullbacks on the daily charts. If the daily declines to a point of changing the weekly status (mainly the 26 week ema) then we will reevaluate.

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Despite some very nice intra-day swings, the index is up a paltry 4 points in the last two weeks. If that doesn't spell out the sleepy summer trading, not much will.

 

Not much change in the chart either.

 

Sto hit the 80 zone, LT MACD had a signal line cross while the short term histo took a breather although it is still in positive territory.

 

The all important 26 week ema still pointing slightly to the upside.

A note of caution on the Naz: It has been the strongest of the big three (Dow, S&P) the past few weeks. While the other two are still firmly in the bear zone, the Naz is dabbling in the bull side. Its hard to get too excited on the bullish stance until the other two join in or reverse our stance if the Naz decides to join them back in bear territory.

[Abby Justa Colon]

Daily update:

Not a lot going on here either.

 

CMO 3-day gave us a decent entry, but the 12-day looks to have some converging lines.

11/34 ema still on the buy side cross but appears to be sinking along with the volume.

Possible back and forth sideways action to build a handle for a cup/handle on low volume before traders start returning after the Labor day holiday.

[Abby Justa Colon]

The all important 26 week ema still pointing slightly to the upside.

Its hard to get too excited on the bullish stance until the other two join in or reverse our stance if the Naz decides to join them back in bear territory.

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We got the reverse on the 26 week ema this past week as the index moves down by 3%.

 

I used a shorter time span chart to show how the 26 week ema has changed course.

The sto crossed the 80 zone from above...the ST and LT MACD histos took on a downward slant...ST signal line is ready to cross early next week.

 

Now that we have the bias back to the downside along with the S&P and DOW, we will once again look for shorting opportunities using the daily charts.

 

One word of caution: we need to keep an eye on that 26 week ema as it is so near to flat that it can change direction very easily (like last week). Once we get a better slope on the direction we can trade with more confidence but in the meantime we have to be very agile.

[Abby Justa Colon]

Daily chart update:

 

The CMO 12-day gave us the break to the downside to put it clearly back in the red zone.

We have to use caution here as we still have a bullish bias on the 11/34 cross. Also note the divergence in the 3-day and prices. As the price moved lower, the indicator traced a more shallow low creating a bullish divergence.

With the light summer trading nearing an end we should see a return to heavier volume soon. Many people expect volume to roar back on the Tuesday after the holiday. While that is a possibility, many times in the past it didn't pick up to higher volume levels until the following weeks.

So even though the weekly says trade from the short side only we have to respect the divergence and play it cautiously. One more push up would give us a great shorting opportunity given that it doesn't push the weekly charts back to the bullish bias.

[Abby Justa Colon]

Weekly chart update:

 

Pretty bearish looking chart as the index topples over 5% last week.

Just about everything is pointing down: ST, LT MACD crossovers and declining histograms. Breakdown in the symmetrical triangle, 26 week ema firmly pointing down.

 

We will look for shorting opps on the daily charts.

[Abby Justa Colon]

Daily chart update:

 

We got the 11/34 crossover into bear territory last week. That was the last of the bullish indicators on our little chart to fall. Last weeks decline came on heavy volume...this year the traders came back from their holiday eager to sell.

 

The 12-day CMO warned us that a longer term decline was at hand. With the sharp decline, the 3-day has been buried in the -100 zone....indicators can stay in the over-sold zone as stocks decline further, but we must look for bounces to scale in short positions. We don't want to jump in too soon and short after a decline such as last week.

The Q's found some support in the 43.30 area and that's the area we will watch for a failure in the coming week(s).

 

We can expect some very volatile moves next week if the bail-out of Freddie and Fanny go through as expected. They will most likely be short term moves of a few days or so giving us another opportunity to short again.

[Abby Justa Colon]

Weekly update:

 

Not much going on here as the index hardly moves up .....only .06%.

 

LT MACD histo sank a tad while the ST histo was flat.

 

The only thing that is showing is the possible divergence in the sto and the 4 week ema... that is a stretch but we will keep an eye on it none the less.

 

26 week ema still pointing down.

[Abby Justa Colon]

We can expect some very volatile moves next week if the bail-out of Freddie and Fanny go through as expected. They will most likely be short term moves of  a few days or so giving us another opportunity to short again.

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Well we got the bail-out and the move to go with it...but it didn't last long. We did get a big volume day with that news but it subsided the rest of the week...although still decent volume all week.

 

CMO 12-day still in the bear camp (red). It did manage to break the downtrend line, but it is too early to speculate on anything stemming from that here.

 

CMO 3-day peaking above +50....need to see it break that plane to the downside before entering any new short positions.

[Abby Justa Colon]

Weekly update:

Not much going on here as the index hardly moves up .....only .06%.

One would think with the wild roller coaster ride this past week that the index would be up/down a large number...but it was only down 1.25%.

 

With small end result movements come small chart moves. Not much different from last week.

Sto still declining, LT MACD in decline mode as well. The ST MACD histo is flat for the second week. 26 week ema still pointing down.

 

The weekly chart is still in a bear market. Hard to say if the bank bail-out will change the direction of the market once its all settled and gone through, but for now its still pointing down.

[Abby Justa Colon]

Well we got the bail-out and the move to go with it...but it didn't last long. We did get a big volume day with that news but it subsided the rest of the week...although still decent volume all week.

 

CMO 12-day still in the bear camp (red). It did manage to break the downtrend line, but it is too early to speculate on anything stemming from that here.

 

CMO 3-day peaking above +50....need to see it break that plane to the downside before entering any new short positions.

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Big volume week for the index. Almost always you see some kind of re-test of the climax volume lows on lighter volume...although I don't think the day after Monday's record volume is considered a re-test.

3-day CMO had a slight divergence before the big ramp up.

Index is still in bear mode until the weekly says its not. So that being said we will wait until the next over-bought condition to re-short.

 

Note: The past couple of weeks have been either a dream or a nightmare for traders depending on your style of trading. Its time to go over your money management rules and remember to use your stops...although in this environment it pays to widen your stops to help avoid whipsaws.

[Abby Justa Colon]

The weekly chart is still in a bear market. Hard to say if the bank bail-out will change the direction of the market once its all settled and gone through, but for now its still pointing down.

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So far the bank bail-out (rescue plan ) is doing little for the market other than some big swings in the futures markets. Index down over 4% for the week.

Any way you slice it we are still in a bear market....little has changed in the weekly chart. Other than a slight positive divergence in the 4 week ema and the LT MACD signal line, there is little to report on the weekly.

[Abby Justa Colon]

Daily update.

 

12-day CMO starting to drift up but still in the bear zone. 3-day gave us another entry point on Friday but tight stops are in place with the possibility of a bank rescue rally. Technically not a divergence in price and the CMO's due to the spike low of a week ago, but a test of that low may produce a positive divergence...but for now we will play it as just a bear market bounce.

[Abby Justa Colon]

So far the bank bail-out (rescue plan? ) is doing little for the market other than some big swings in the futures markets. Index down over 4% for the week.

Any way you slice it we are still in a bear market....little has changed in the weekly chart. Other than a slight positive divergence in the 4 week ema and the LT MACD signal line, there is little to report on the weekly.

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Index down a whopping 12% for the week!

 

Chart is in full breakdown mode. No explanation need.

 

Hard to say if Fridays selling was just a sell the news type of thing or the fact that many traders didn't want to hold anything long over the weekend (remember last weekend).

 

A word of caution though...many indicators are at extreme levels on the daily charts. We will get a bear market rally at some point...so we must be on guard.

[Abby Justa Colon]

Daily update.

 

12-day CMO starting to drift up but still in the bear zone. 3-day gave us another entry point on Friday but tight stops are in place with the possibility of a bank rescue rally. Technically not a divergence in price and the CMO's due to the spike low of a week ago, but a test of that low may produce a positive divergence...but for now we will play it as just a bear market bounce.

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Daily chart update:

 

It definitely passed the low from last week to create some divergences.

I added a couple of other indicators to show these divergences.

CMO gave us a good entry last week and also gave us the exit of 1/2 position on Friday.

12-day showing some divergence.

 

Now we must wait for some kind of bear market rally or bounce to give us another entry for a short position.

 

Not many places to hide in this kind of trading environment....now more than ever we must use tight stops and sound money management.

[Abby Justa Colon]

Index down a whopping 12% for the week!?

 

Chart is in full breakdown mode. No explanation need.

 

Tack on another 13.67% as the bear market deepens!

This has been a bears' dream of a market.

 

The weekly has broken down completely.

Note the Sto is not reaching lower levels on this free fall...it may be signaling us that this massive move down is nearing an end for the short term.

Also note the "big air" syndrome (black circles) we talked about earlier in the year. We are getting to a point of the market over-doing its move and at some point returning to its longer term trendlines.

 

Bottom line: the panic of last week can continue but not forever. We will get some kind of relief rally or bear market bounce at some point. The easy money to the downside has been made for this run, shorting here can be dangerous.

 

We will wait for a bounce to bring the indicators up into our sell zone. No long trades here no matter how compelling they may appear.