Wednesday, November 11, 2009 at 10:00AM | Asher Pinto
The following piece was featured in Tuesday's Nightly Commentary piece in the Members' Lounge.
Good evening,
The markets traded within a very narrow range near yesterday's closing levels, today. That is to be seen as a big win for the bulls. As long as the indices are above their 20dMAs, the bulls will remain in charge.
One more day of moderately sized gains from current levels would push the indices to new highs on the minor and intermediate trend. If resistance (on SPX and NDX) is broken tomorrow, all levels of trend will be confirmed as bullish, once again. We've seen the indices break out to new highs three times over the preceding three months. On each of those occasions, they ended up turning back down after moving to slightly higher highs.
This time around, there may be cause to believe that any breakout might lead to a larger leg of upward price action than occurred on each of the previous instances. One of the reasons for this is the fact that the current consolidation has taken place over a period of two to two-and-a-half months and over a larger price range.
A lot of energy has been built-up within the consolidation range and a sharp move that is likely to be at least as large as the height of the range should take place following any sustained breakout. Whether such a move takes place to the upside or the downside, remains to be seen (and will depend on whether resistance is broken now or prices turn downwards and go on to break the support levels that were put in place last week).
We've added several potential trading picks for your consideration at the end of tonight's commentary piece. They consist of setups that will be added, tomorrow, to the Long Stock Picks and Bullish Options Picks lists, which already consist of several winners. [See Nightly Commentary piece in Members' Lounge]
S&P-500 Large Cap Index - Daily Chart...
S&P-500 Large Caps (SPX)
SPX is challenging resistance at 1098. The action seen over the past 8-9 weeks now looks like a potential ascending triangle. If resistance at ~1100 can be broken, a move towards the 1180-area would be on the cards.
Note that RSI and MACD are now clearly back above their centerlines and that is a sign that the markets may be ready to resume the intermediate/major trend rally in earnest. Additionally, note that the upper bollinger band is now rising. Not only will it be the first important target on the upside, but it could also potentially sucking prices upwards and to even higher highs, as long as the band continues to rise.
The only sign of trouble for the bulls is the (falling) volume levels that have come in over the past week and a half since the rebound has begun. Regardless, we're forced to give the benefit of the doubt squarely to the bulls, as long as prices are above the 20dMA.
Dow Industrials - Daily Chart...
Dow Jones Industrials Average (INDU)
The upper bollinger band on the Dow has risen once again today and sharply at that. The band should move to much, much higher levels over the coming sessions and that will open up further upside on the index in the interim.
RSI and MACD have not moved to overbought levels and, as such, there is a lot of room to the upside, as far as the momentum indicators are concerned. Once again, the low volume levels are a bit of a worry but as long as the multitude of other bullish signals prevail, the bulls should hold the upper hand.
Nasdaq-100 Index - Daily Chart...
Nasdaq-100 Index
NDX reached intermediate resistance at 1775 today. There's still a decent amount of room between current levels and the upper bollinger band. So there is a good chance that resistance will be broken as prices eke out the upper band.
Assuming that happens fairly soon, we could see an explosion to the upside. The pattern seen over the past two months now resembles a potential rectangle. A break of resistance at 1775 would leave a presumed bull rectangle on the charts. The height of said pattern is 125 points and, as such, a further 125-pt climb (to 1900) will be on the charts over the coming weeks, as long as prices can stay above the broken (if it breaks) resistance level at 1775.
The fact that the upper bollinger band is rising means that another potentially strong source of resistance will have dissipated (since the band could start to rise sharply if there are further gains in the days that lie ahead) and, in fact, the rising band could act like a magnet pulling prices to even higher levels.
[To view new trading picks, please log in to Members' Lounge]
« Challenging Resistance; Sustained Breakout Could Lead to Explosive ST Move »
The following piece was featured in Tuesday's Nightly Commentary piece in the Members' Lounge.
Good evening,
The markets traded within a very narrow range near yesterday's closing levels, today. That is to be seen as a big win for the bulls. As long as the indices are above their 20dMAs, the bulls will remain in charge.
One more day of moderately sized gains from current levels would push the indices to new highs on the minor and intermediate trend. If resistance (on SPX and NDX) is broken tomorrow, all levels of trend will be confirmed as bullish, once again. We've seen the indices break out to new highs three times over the preceding three months. On each of those occasions, they ended up turning back down after moving to slightly higher highs.
This time around, there may be cause to believe that any breakout might lead to a larger leg of upward price action than occurred on each of the previous instances. One of the reasons for this is the fact that the current consolidation has taken place over a period of two to two-and-a-half months and over a larger price range.
A lot of energy has been built-up within the consolidation range and a sharp move that is likely to be at least as large as the height of the range should take place following any sustained breakout. Whether such a move takes place to the upside or the downside, remains to be seen (and will depend on whether resistance is broken now or prices turn downwards and go on to break the support levels that were put in place last week).
We've added several potential trading picks for your consideration at the end of tonight's commentary piece. They consist of setups that will be added, tomorrow, to the Long Stock Picks and Bullish Options Picks lists, which already consist of several winners. [See Nightly Commentary piece in Members' Lounge]
S&P-500 Large Cap Index - Daily Chart...
SPX is challenging resistance at 1098. The action seen over the past 8-9 weeks now looks like a potential ascending triangle. If resistance at ~1100 can be broken, a move towards the 1180-area would be on the cards.
Note that RSI and MACD are now clearly back above their centerlines and that is a sign that the markets may be ready to resume the intermediate/major trend rally in earnest. Additionally, note that the upper bollinger band is now rising. Not only will it be the first important target on the upside, but it could also potentially sucking prices upwards and to even higher highs, as long as the band continues to rise.
The only sign of trouble for the bulls is the (falling) volume levels that have come in over the past week and a half since the rebound has begun. Regardless, we're forced to give the benefit of the doubt squarely to the bulls, as long as prices are above the 20dMA.
Dow Industrials - Daily Chart...
The upper bollinger band on the Dow has risen once again today and sharply at that. The band should move to much, much higher levels over the coming sessions and that will open up further upside on the index in the interim.
RSI and MACD have not moved to overbought levels and, as such, there is a lot of room to the upside, as far as the momentum indicators are concerned. Once again, the low volume levels are a bit of a worry but as long as the multitude of other bullish signals prevail, the bulls should hold the upper hand.
Nasdaq-100 Index - Daily Chart...
NDX reached intermediate resistance at 1775 today. There's still a decent amount of room between current levels and the upper bollinger band. So there is a good chance that resistance will be broken as prices eke out the upper band.
Assuming that happens fairly soon, we could see an explosion to the upside. The pattern seen over the past two months now resembles a potential rectangle. A break of resistance at 1775 would leave a presumed bull rectangle on the charts. The height of said pattern is 125 points and, as such, a further 125-pt climb (to 1900) will be on the charts over the coming weeks, as long as prices can stay above the broken (if it breaks) resistance level at 1775.
The fact that the upper bollinger band is rising means that another potentially strong source of resistance will have dissipated (since the band could start to rise sharply if there are further gains in the days that lie ahead) and, in fact, the rising band could act like a magnet pulling prices to even higher levels.
[To view new trading picks, please log in to Members' Lounge]