pavel

Dear reader, I want to remind that all I write here is my personal opinion and has only purpose to entertain you and can’t be in any way used as advise to buy, sell or keep any kind of assets. Let’s begin with SnP500 weekly picture and I assume that all who use levels and trend lines to analyze assets have something similar with what I have done so far on my chart. I think that there are so many who looks at resistance trend line (RTL) of down trend (A-A’ on picture). Thinking, that there are so many watching it I assume that some players have opened shorts already and have being pushed out during last two days. I don’t know whether they are right or wrong, but I would say they have interesting down targets: 1950, 1900, 1800 (I consider this level as really strong support), 1750. Reaching last mentioned level implies that down trend broken and who knows where market might stop it downfall. I see a couple possible scenarios. ...

Hello mates! All that I write on my blog is just my personal opinion and nothing more, and should be treated as such. Some background: - Banks changed their policy making game and promise to dance more making their decisions. - Two armed conflicts (Ukraine, Israel), but markets have not reacted with heavy selling. - FED sends contradictory signals. - Unemployment, deficit, GDP… you name it. Having in mind all above and being sure that this is just the tip of the iceberg, we need to make sense what is going on with stock market on the big picture. Let us look on SnP 500. On attached chart it is obvious that index is in uptrend weekly, and daily it shows minor reaction during last week. The reaction brings index in local trading range (marked “TR” on daily chart). Another easy reading is long-term resistance line (marked “A” on chart), and I assure you that ALL who looks at charts watches this line. Drawing this type of lines always tricky (each line maker do it with his (her) own terminal and rules) and we better to watch them as zones. We can see that index dancing around the line for a months it and looks a bit overbought (stays above the line). Nevertheless, I have to say that despite the “A” - line there is no heavy selling from yet (good news for bulls). Also, we have to remember that usually, such a long term up trends do not end at once. ...

Initially, when I heard the news about what is going on Cyprus I felt a kind of anger, they (governments) always force people to pay for their mistakes and now it’s another time. Later on, after I slept over the news I think that the decision to get a piece of Russian laundry cake probably good decision to resolve the situation. Still, it has its flaws of cos. Well, that was some feelings to share and now the time to observe whether a small trader can make sense of the situation merely watching prices. It’s obvious that stock markets having rally since November of 2012, however some thing happened during last four-five weeks which I want to ask your attention for. But, instead of looking on stocks let’s take a look on USA bonds. I do believe that it possible to understand what is going on just following prices and now, I’ll show another example how it works for me to understand the situation. ...

I have some thoughts I want to share about financial markets. Let’s begin with S&P as the one of the largest of stock market indexes. I took monthly chart and marked some points which I think might give me clues to understand what’s going on. I do not pretend for deeply understanding of macroeconomic processes but I just try to apply common sense to the situation. In order to help you to understand what I am talking about I need to disclose some basic elements of markets which I take into account. First and foremost I do believe that on financial markets operate much more informed and intelligent (than me) group of professionals who make “markets music”. I do believe in trends and I have really simple definitions for them, such as: up trend – each new high higher than previous one and each new low higher than previous one too and opposite definition for down trend. Then I want to know the strength of trend and in order to measure it I use progress between each new high, the bigger progress - the stronger trend. I pictured my points of view. ...

Well, 10Y notes still keeps it’s trading range since the beginning of November. It seems that buyers and sellers struggle in this area and as long as it goes I prefer to stay aside. U.S. Dollar Index went back to 79.8$ selling zone after down reaction. Last time I suggested that it could be good to have a reaction with a sign that buyers still keep situation under control. Well, last November trading session showed that supply overcome demand, but next 6 days price was kept above 1/2 last up wave that a good sign that at that level price got support from buyers. As we can see it now demand absorbed supply and initiated rally to the area where last down reaction started. I expect asset to touch 80.45 or even 81.45 levels, however it possible for price to make another 79$ level’s touch. In case if asset going to change its mode I have another scenario in my mind which I would call “red flag”. “Red flag” scenario means in this situation downward move which can bring price under last support level at 78$ or even lower. I don’t think that it’s a good idea to open position right now. For long it’s too late and for short it’s too early. ...

10Y note Weekly 10Y note keeps previous historical high level at 130. Having up rally from obvious support level at 128 asset remain in a potential down trend which marked on the picture. However this down trend is just about correction to a major up trend which started at the beginning of this year. However, I don’t see any obvious supply coming in asset, despite up trend deterioration since August 2011 and present potential down trend started since September. To me, strong up rally from October 28th is a good sign that buyers keep the situation under control. From the other point of view, after that strong up rally I prefer to see new high instead trading range. So, last local trading range and last week close which was kept almost at the same level as previous close let me have a bit doubt that buyers enough strong. I don’t think that it’s a good time to open long because of the price position and high risk/reward ratio. I prefer to have more obvious situation. I don’t think about short position since I haven’t got evidence that supply overcome demand. Daily situation looks more boring due to a mentioned local trading range at 130 level. I assume, that demand absorb supply because asset keeps price close to the selling zone. In any way, I remain myself aside in this situation. In order to open long position I would like to have strong up rally above selling zone marked on the picture red and later on a correction without much power of supply and acceptable risk reward ratio. ...

Don’t trust markets correlations. There are a lot of funds try to catch them. Commonly, public believe that investors and their decisions are rational on financials markets. I think that investors irrational but wise in making their decisions. Talking about investors this time I mean major markets operators, sometimes I call them Composite Man (CM). That’s why I do believe that each market situation is unique and that’s why I do believe that markets repeat it in their behavioral patterns. Each coin has two sides. Let me remind you movie “Indecent proposal” where John Murray, in order to get expectable result, use coin with similar sides. So, don’t forget this example when you try to find correlations among financial markets. By the way I like this movie. ...

This days major indexes move says that weekly down wave is still intact. I follow simple investment philosophy which was disclosed by William O’Neil in his book “How to make money in stocks”. He said that “The hard-to accept great paradox in the stock market is that what seems too high and risky to the majority usually goes higher and what seems low and cheap usually goes lower”. Let’s take a look on SnP and NASDAQ. Two days ago they proved weekly down trend and let me expect to touch new downward levels (labeled as “A” on pictures). I advise do not try to buy falling markets until they show significant sign of turning points even if they will touch marked levels. For me the only reason to believe that turning point occur is obvious pattern when asset gets an oversold position and shows proven by major markets operators interest to buy. ...

I would notice that SnP become to an interesting position due last down trend from May 2011 up to date. There are interesting levels to notice: 126.8 is ½ of last up wave (Nov 2010 116.5$ – May 2011 137.2$) and near 128$ are two support levels. Price broke down channel and has got oversold position. Yesterday’s bar looks like stopping action due to lack down progress and comparable volume. This situation let me expect new attempt to raise price. ...