Weekly Signals

[Abby Justa Colon]

I would expect the Sox to re-test the new support line in the 490-492ish area before moving too much higher. You can't rule out a slight breach of this new support line mainly to shake out the weak hands that just bought the breakout. Eventual target would be around 535-540 for this run.

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Well we got the re-test with slight breach to shake a few out. The 490-492 area looks to have some decent support to it for now. If the general market pulls back, look for that area and the 20 day moving average for initial support.

[Abby Justa Colon]

Another divergence in the making. This chart shows the percentage of stocks in the QQQQ that are above their 50 day moving average. Similar to last year, the index price itself keeps rising, but the number of stocks above their 50 can't keep up. Either they will catch up with the price or the price will catch up with the stocks....time will tell.

[Abby Justa Colon]

The weekly moves ahead once again but just slightly this time.

Notice the slight decline in the Force Index and the ST MACD even though price was up for the week?

Although the trend is still saying buy from the long side only, the Force Index and the ST MACD are saying the smart bulls are taking profits and the new bulls that are replacing them are not buying with the same enthusiasm. This would be a great time to lock in any profits on the index trades. As long as the weekly remains  on the bullish side, we can re-enter these trades by using the daily for entry/exit targets.

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Starting to sound like a broken record. Last weeks gains were a measly .16%. Pullbacks are being bought quickly, although not with the same fever as before.

 

Note the ST MACD signal line started to turn down last week. The LT MACD histogram looks to be losing its momentum. Still trading from the long side but with caution and only after pullbacks on the daily charts

[Abby Justa Colon]

And the daily....Note the pullback to below to -50 on the 3-day CMO was once again a signal for the "buy the dips". Pullbacks are shallow and quick. In order to buy these dips one would need to have the buy order filled out and ready to go with the mouse courser on the buy button ahead of time!

 

Once again, note the divergence in price and the 12-day CMO.

 

Volume was heavy on Thursday...could be a flurry of profit taking, but the buyers didn't show up the following day with the same vigor. Most likely that volume will be re-tested at some time soon. If its on light volume, it will be just another buying opportunity. If its on heavy volume, then it could be the start on a change in trend.

 

Either way, be careful and be quick to take any profits until we see what develops here.

 

Good Luck...

[Abby Justa Colon]

Sox update...looks like that 492 area will be re-tested sometime soon as major divergences are developing with price and the MACD histo and RSI.

Need to keep an eye on 492 area as well as the 20 and 50 day EMA for support.

[Abby Justa Colon]

You can probably guess that one of my favorite chart patterns are divergences. Positive and negative.

 

Heres the QLD (proshares ultra bull ETF)

 

Note how prices and indicators performed in late Feb. early March.

 

Now note how they are looking now.

 

Food for thought.... one more reason to be careful now and quick to take profits on longs.

[Abby Justa Colon]

Starting to sound like a broken record. Last weeks gains were a measly .16%. Pullbacks are being bought quickly, although not with the same fever as before.

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If the indicators look like they haven't moved much...thats because they didn't move much... -.10% for the week. Still, the main 26 week ma says trade from the long side only.

[Abby Justa Colon]

Q's daily.

The Cmo 12-day still shows the divergence, but it has started to work off a little this past week.

 

Note the volume picked up on the down days this past week. Also note the divergence in the 3-day Cmo this past week (lower price, but a more shallow pullback in the indicator). The 11/34 ma's still in bull mode.

 

A small flag possibly broke out on Friday.

 

As in past weeks...upticks on pullbacks (such as this past week) to -50 on the 3-day Cmo can be bought in up market trends. Such is the case now, refer to the weekly chart above to determine the current trend.

 

Good time to ratchet up the stops as the market moves in your favor. As a rule of thumb, try to protect about 50% of your profits with tight stops. That way if we get another day like 2/27, then you will be stopped out with decent gains.

 

Good Luck.

[Abby Justa Colon]

Sox update...looks like that 492 area will be re-tested sometime soon as major divergences are developing with price and the MACD histo and RSI.

Need to keep an eye on 492 area as well as the 20 and 50 day EMA for support.

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Was re-tested this past week. Its right there now. Tagged the 50 ma and bounced up to the breakout area. This next week could be the telling week. Could be one more push down to flush out the weak hands.

Any bounce above the 492 area can be bought via PSI, SMH or Rydex.

[Abby Justa Colon]

NDX Weekly Update.

 

The NDX (QQQQ) is still in no mans land. Once again, not much of a move for the week. (.40%)

Still, the 26 week ma says trade from the long side only for now. That could change in due time, but we have to stick with what the market gives us and not try to pick a top or bottom.

 

Notice the short term MACD is looking to cross over and the histo to go below the zero line.

 

From page one...

When the ST  MACD line crosses over and is opposite but the 26 week ma is still pointing up (such is the case now) then I use daily oscillators at low points for my entries and high points for exits, but still trading from the slope of the 26 week ma.

 

Once again, we will use the daily charts for entries/exits.

[Abby Justa Colon]

Heres the daily.

 

Note the divergence of the past few weeks on the CMO-12 day started to get worked off this past week.

 

The way we are playing this is still the same. Buy on the upticks (readings above -50) after the CMO-3 day tags -50 or below and sell when it tags +100.

 

Note that the time the CMO-3 day is staying in positive territory (green) has diminished from the last uptrend (late March thru early May). The market is still raising a caution flag, but if we a careful with entries/exits and use sound money management we can still find decent swing trades while still being cautious of a major down daft

[Abby Justa Colon]

Heres the Sox update:

 

Was re-tested this past week. Its right there now. Tagged the 50 ma and bounced up to the breakout area. This next week could be the telling week. Could be one more push down to flush out the weak hands.

Any bounce above the 492 area can be bought via PSI,  SMH or Rydex.

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We got the flush down, but never the bounce. Looks like at some point it will test the lower line of the triangle. Right now its just treated as a false breakout.

 

The Sox need to lead the way if we are to head higher, and right now it suggests the opposite or sideways at best.

[Abby Justa Colon]

CBOE Put/Call Ratio.

 

Watching the blue line for a crossover....would be bearish.

[Abby Justa Colon]

Still, the 26 week ma says trade from the long side only for now.

 

Notice the short term MACD is looking to cross over and the histo to go below the zero line.

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I added a "new" indicator for the weekly. I swapped a stochastic indicator for the Force Index. Force Index is a useful indicator but it mimics the ST MACD. I was looking for another easy to use bull/bear type decider. Lets see how it works out. Above the green line the bulls are in power, below and the bears are in charge.

 

Not a bad week. +2.06 for the index. If using margin such as the QLD you had 4%+ for the week...not to shabby.

 

The weekly looks somewhat better here as the ST MACD bounced off its signal line, but it still shows a divergence in the histogram (a caution sign). The 26 week ma still points up and says to trade from the long side. The LT MACD turned up slightly. The new indicator (stochastic) looks to be breaking below the 80 line(another caution sign). We will have to watch this to see if we get a bounce (like last Nov) or if it falls down to the bull/bear line.

 

All in all, we have to respect the power of the bulls and trade with them. With the caution signals its not a time to blindly jump in.....and of course we need to use tight stops and sound money management.

[Abby Justa Colon]

Heres the daily.

 

Note the divergence of the past few weeks on the CMO-12 day started to get worked off this past week.

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Not a time to chase. Divergence still in place, but being worked off very slowly.

The way we are playing this is still the same. Buy on the upticks (readings above -50) after the CMO-3 day tags -50 or below and sell when it tags +100 or ratchet the stops up to protect profits.