4/17/2012 SPY #10

S&P 500 (SPY)

(Daily Chart)

-          S&P broke below the upward channel, suggesting a trend reversal.

-          S&P looks like a 1-2-3 down move. The down move came off the top @ $142.21 is the 1^st leg. The 2^nd leg retraced as far as 50% of the 1^st leg move @ $138.99 and retreated, setting up for the 3^rd leg down move and the completion of the 1-2-3 pattern.

• Right now the resistance level @ $138.9 and support level @ $135.76 are the gauges for the 2^nd leg consolidation range. A break of either level will signal the next directional move.

• The 1-2-3 down move pattern will be confirmed when the S&P breaks below the support level @135.76. The 3^rd leg move should take the S&P down to the next support level @ 134.36, where prior pivot low is found.

• On the other hand, if the S&P goes above the resistance level @ $138.9, this signals a possible reversal. The S&P very likely to move back into the upward channel and trade higher. However, do watch out for the 61.8% retracement level @ $139.75, sellers may step in at this level and immediately pushing the S&P back down to the consolidation range, resulting in a bull trap.

-          The S&P is still above the prior pivot low @ $134.36 so this is still an uptrend. A confirmed trend reversal will occur when the S&P develops a lower low underneath the prior pivot low level @ $134.36.

• If the trend does not reverse, it is possible for the S&P to climb back up to the double tops resistance @ $141.87.

(Hourly Chart)

-          Both the double tops and continuation diamond patterns from last post are completed and exhausted.

-          A semi-double tops pattern formed and found resistance @ $138.9. Because the resistance level is in between the gap #2 from $138.27 to $139.64, if the S&P breaks above the resistance level, I expect the stock to rise to gap fill @ $139.64 and consolidate. However, in order to get to gap fill level, the S&P has to clear the 200 SMA (white in color) as well, selling pressure will increase substantially as the stock price approaches the 200 SMA. In addition to the 200 SMA, there is also a 50 SMA (grey in color) running down with the S&P, it will be another source of resistance if the S&P bounces.  

-          To the downside, there is a gap #1 to fill from $136.25 to $136.9. I'm expecting the gap fill to happen tomorrow, because the later the week goes, the lower chance gap #1 will get filled. I think if the S&P breaks below the gap #1 top @ $136.9, it should retreat down to gap #1 bottom @ $136.25 immediately.

-          Major support should be found @ $135.75. If this level does not hold, there is plenty of clear space for the stock price to run down to the next support level @ $134.36 since there isn’t any underlying support between these 2 levels.

(15 Minutes Chart)

-          The S&P has been stair-stepping lower within a downward channel in the last 2 trading days. Notice each subsequent high is lower than the previous one (Lower Highs, High #1 > #2 > #3) and each subsequent low is lower than the previous one (Lower Lows, Low #1 > #2 ), I'm expecting the S&P to trade within this channel for another day or two and form the 3^rd lower low by Wednesday.

I hope this post offers you some insight, thank you for reading and please feel free to give me some feedback.   

4/15/2012 GOLD #4

Gold Future (/GC)

HI guys, I apologize for not having any update on gold lately but here is what I think about the gold future price. From the macro perspective, market sentiment is overall optimistic, gold price should find it hard to go higher. With declining unemployment rate, near zero interest rate and the Fed reassured the absence of QE3 in the near future, these factors should provide strength to the dollar value. And because the dollar is inversely related to the gold price, gold price should find some more resistances to the upside. However, some underlying concerns still exist in the market, if the Europe debt crisis worsen or corporations fall short on earnings as we move into earning season, this will definitely hurt investors’ confidence in the dollar, causing them to move their money into safe heaven assets, such as gold, again. Nevertheless, below are my technical analyses on the gold future charts:      

(Daily Chart)

-          A mix of bullish and bearish signals present in the daily chart, I think it’s better to let the chart develop a little more before choosing a side to go with.

-          Potential bearish golden cross @ $1695.5. Right now the 50 day moving average (50 SMA, grey in color) is touching the 200 day moving average (200 SMA, white in color), when the 50 SMA crosses below the 200 SMA, it is a bearish signal. Notice that the 50 SMA touched the 200 SMA once in February and bounced off it, I think the retest here is likely to result in a bearish golden cross. However, if the 50 SMA bounces again, this shows significant strength in the gold price, betting on the upside will be a better choice.

•  As the gold price approaches the 200 SMA @ $1695.9, the moving average will be a strong resistance level. If the up move is imminent, gold price will take sometimes to clear the 200 SMA resistance.

-          The last 2 candlesticks in the chart form a bearish tweezer top pattern. Both candlesticks opened and closed near the same price but their directions were completely opposite, signaling a sentiment change in the short term. And because the final candlestick is a down bar, gold price is expected to retreat in the next couple days.

-          Gold price resumed to the down channel in early March and continued lower since then. Coincidently, a bearish tweezer top appears at the channel top, signaling a downward continuation within channel until gold price finds support @ $1600.

-          On the bullish side, I see an inverted head & shoulder pattern developing since September 2011. The inverted shoulders’ top @ $1600 will be a main gauge to watch because gold price hasn’t gone under $1600 since the beginning of 2012. If gold price bounces on the $1600 number, I expect the move goes up to the neckline resistance @ $1792.3. If the gold price takes another step further above the neckline @ $1792.3, this will become a confirm breakout on the head & shoulder pattern, one should look for the gold price to go as high as $1923.7 for a completion of the move.  

• If the $1600 level doesn’t hold, watch the gold price to consolidate near the major support level @ $1546.5, a breakdown on this level may lead to another round of sell-off that should take price down to $1484.5.

(Hourly Chart)

-          For the next day or two, I think the gold price will retest the down channel top or the resistance #1 level @ $1664.6 and fail, completing a 1-2-3 move to the downside.

-          Minor support levels are found @ $1648.1 and $1640.3. A breakdown on the $1640.3 level should bring the gold future price to the bottom of the downward channel, which is around the $1600 level.

-          On the upside, each prior pivot high is a minor resistance. Gold price may consolidate a little at $1685.3 and $1697 as it moves higher. If one decides to take a quick long trade, these minor resistance levels can be reference points for profit taking and the final target will be the resistance level @ $1706.2.  

-          (Possible Trade) – a quick short selling position @ $1664.6

• Target: Completion of the 1-2-3 down move at the support level @ $1648.1, which is a 24 points target

• Risk: 5 points risk @ $1670

I hope this post offers you some insight, thank you for reading and please feel free to give me some feedback.

          

4/8/2012 SPY #9

S&P 500 (SPY)

Daily Chart

-          The SPY is still making higher high and higher low suggesting a continuation uptrend but the recent move is showing some signs of weakness, so beware of a large pullback to happen.

-          If the momentum to the upside is strong enough, the SPY should bounce on the green uptrend line or the gap support level @ $138.1 and take the stock to the 2008’s high @ $143.32.

-          Notice that the SPY has been trading above the 20 day moving average (yellow in color). If the SPY can’t climb above the 20 SMA again in a few days, this should bring in more selling pressure, pushing the stock price lower.

Hourly Chart

-          There is a rising 200 SMA (white in color) coming from underneath, this will offer some extra support strength in addition to the minor support level @ $138.74.

-          If the SPY breaks the valley #2 low @ $139.09, it is a confirmed double tops pattern. The first target on the pattern is the gap support level @ $138.1 and the second target is the support #1 @ $134.33.

-          The S&P formed a diamond pattern and it indicates the stock is about to make a move. The pattern can either be a diamond bottom or a continuation diamond depending on the direction of the breakout.

-          (Possible Trade):  long position @ $139.93 from last week is still in play

• Risk: Sell the position when it breaks the previous low @ $139.09; or, if one is willing to put on more risk, he can move the risk level down to the minor support @ $138.74.

• Target: Sell 50% at the breakout level @ $142.39 and run the rest to the 2008’s high @ $143.32.

(15 Minutes Chart)

-          If the diamond pattern breaks to the upside, the pattern is a confirmed diamond bottom. The target on this pattern is the same price level where the stock price started the drop that lead into the pattern. In this case, the start of the move is at $141.26 so the target on the pattern breakout is at $141.26

-          If the diamond pattern breaks to the downside, the pattern is a confirmed continuation diamond. This pattern has the same idea as the 1-2-3 move. The breakdown (3^rd leg) should have the same length as the move that lead into the pattern (1^st leg); that is, the target of the breakdown is $1.88 ($141.28 - $139.4) below the breakdown price.

I hope this post offers you some insight, thank you for reading and please feel free to give me some feedback.

4/1/2012 SPY #8

S&P 500 (SPY)

Hi guys, i'm going to do the blog in bullet point form in the next few post, so you don't have to read the whole paragraph. Let me know how you like it?

(Daily Chart)

-          SPY continues to bounce on the 20-day moving average (yellow in color).

-          SPY has been making higher highs (peak #1 & peak #2) and high lows (valley #1 & valley #2), signaling the trend goes higher.

-          The green bar at valley #2 has the highest volume in the last 10 trading days and reversed the previous 2 days’ drop, which signals an upward continuation on the SPY.

-          I expect the trend to go higher and find resistance at the 2008’s high @ $143.32.

-          Pullback will happen as the SPY continues higher; Support #2 @ $137.95 will be the first major support level on the uptrend. Support #1 @ $134.64 is another major level, if the SPY breaks below Support #1 and the following candlestick opens below the support #1, this is a confirm reversal signal on the broad trend.

(Hourly Chart)

-          The SPY developed an inverted Head & Shoulder pattern in the last 3 trading days. To find the technical target on this pattern is to add the perpendicular distance between the head and neckline (light blue in color) to the pattern breakout point. That is:

= $140.82 - $139.09 + breakout point

= $1.73 + the price level where the SPY crosses the neckline.

-          The SPY found a flat top @ $141, it may experience minor resistance at this level in the next 2 trading sessions.

-          If the SPY breaks the 52-weeks high @ $142.39, the breakout should take the SPY up to the 2008’s high @ $143.32. 

-          The 50 SMA (grey in color) is about to cross below the 200 SMA (white in color); when this happens, this may bring in more selling pressure to the intra-day trading session.

-          (Possible Trade)  >> Long at support @ $139.93

• Risk: Sell the position when it breaks the previous low @ $139.09

• Target: Sell 50% at the breakout level @ $142.39 and run the rest to the 2008’s high @ $143.32

(15 mins Chart)

-          A few bearish signals are seen in this chart.

-          The flat top found at the $141 level is also the 61.8% fib retracement level from last week’s top to low, signaling a potential 1-2-3 continuation to the downside.

-          If the SPY can’t break the $141 level to the upside, it may develop into a double tops pattern. The bearish double tops pattern will be confirmed when the SPY drops below the middle valley @ $140.17 and the target on this pattern locates at $139.19.

-          (Possible Trade)  >> Short the double tops at current price @ $140.95

•    Risk: stop 50%@ $141.1 and stop the remaining 50% @ $141.25 

• Target: cover 50% @ $140.17, cover 25% @ $139.93 and use trailing stop for the remaining 25%

I hope this post offers you some insight, thank you for reading and please feel free to give me some feedback.