(click on image to enlarge)Just an observation of mine which I've yet to hear anyone pick up and discuss on Bloomberg:
Click on the above chart. When it expands, look at today's closing Japanese Candlestick. At one point during the afternoon, the low of the trading session touched the trendline for a "reconfirmation".
If we were bullish on fundamentals for a stock with a similar chart, this would be a bullish indicator to buy near a historic "mean".
However, as we are on the Edge of Panic in our stock markets, what we want to watch tomorrow is to see if this trendline is pierced tomorrow for a breakdown of support.
Notice, too, the red squiggly line almost in perfect rate of rise with the trendline. That is our 200 day moving average line.
The 200 day moving average is an important indicator. If the Dow falls below it and closes below it sometime this week, this will signal day and swing traders that the breakdown in markets is going to bring more pain.
In these markets, especially with housing, lender, banking and insurance stocks being hammered, this could be the beginning of a new more serious downturn in the markets.
This chart is for all my friends on Motley Fool's "Macro Economic Trends and Risks" discussion board which is now FREE to access. Come join us.
5 comments:
good chart!!
yes, it is definitely make it or break it time
internals look pretty bullish from contrarian view, the new his and lows are hammering out some pretty extreme readings. this stuff usually doesn't continue for long in more corrections, but maybe in a true bear it will. the 200 day MA is my definition of bull vs bear. it's reasonable to expect at least a headfake below it to shake out some more stops, but i do expect a relief rally... for which almost noone seems to be calling, by the way
short USD (abbottmd)
http://online.wsj.com/public/article_print/SB118705636964396823.html
by the way, check out the fron page of yesterday's WSj... recognize anyone???
Yo Doctor shortUSD,
I could not find the article in the WSJ in which you must have been quoted or highlighted.
I am a subscriber to the WSJ. Could you leave the link here?
Secondly,I have not sold out a single one of my hodlings in this almost 10% fall of the S and P 500.
Only one of my stocks, AKAM, has broken through a longterm trendline.
I'm interested in your knowledge of trading currencies and shorting.
Where did you gain all that knowledge, my man? Seminars, books, trading academy?
Keep an eye on the hurricanes in the gulf.
I say Oil will never go below $45 a barrel again in our lifetimes, but who's to know if we have a Global Meltdown with concurrent runaway deflation?
Lots of good food for thought on Motley Fool. See you over there.
p.s. You work for Abbott Labs? Great company. Wish I had bought their shares about, what, 3 or 4 years ago right around the time I was learning to really ace the market with longterm charting.
Let me check.
Yeah, ABT is $52 and change. I'd be a big STRONG BUYER at $42 and change. I really like the biz. I hope you work there. You will be my "eyes".
article was on front page tuesday, but they left the picture out.
i am in private practice. if i were related to abbott labs, i'd be out fishing now!
brian
Brian, what was the title of the article? I still haven't found it.
BTW, nice pop today on the lowered Discount Rate. I have to think Wall Street was "tipped" yesterday; hence, the run up on the Banker Index yesterday and today.
p.s. I saw the excellent link you laid on the METAR board showing the work of the CMT (can't remember his last name) who caught the "hammers" on all those charts, many of which I've never monitored.
What's your thoughts about the Discount Rate? Do you think a Fed Funds rate drop is now a slam dunk? I'm not too sure. Still digesting today's action.
Wendy posted some great thoughts with WSJ links about smaller banks being helped out by today's Discount Rate drop.
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