John Mylant's  Instablog

Technically Speaking

RSI- with the latest high this week a bit lower than the last one, the RSI indicator continues to bleed weakness in the present bullish move up. But-at this point my observations strictly point to a weakening in the move but that is all. It would not be uncommon for the stock to rest a little before it continues to move up.

MACD- the MACD indicator come buying the trend and the momentum of the trend together to help us understand how fast the stock is moving. What we can observe presently is that the momentum of the upward trend continues to weaken but it still has a bullish flavor to it so I am hesitant to commit to saying the stock is getting ready to turn around.

Bollinger Bands- the stock has touched the bottom band the last two dips, but is also using the 50 day moving average as support. The bottom band is just starting to move sideways which strictly means consolidation and I cannot go past that. I would like to see it drop through the bottom band and drop through the 50 day moving average before I give it any more bearish support.

Summary- the SPY still appears to be in a consolidating phase which could signify a period of rest before goes up or continued weakness and move down in the future. But present observations can't go past strictly sand there is weakness in the present bullish move.

Current Events

With signs of a slower economy mounting, the near-term outlook for U.S. stocks isn't rosy, but investors may find comfort next week from the world's major central banks.

The Federal Reserve will meet on Tuesday and Wednesday, with the report of weaker-than-expected, first-quarter growth could reinforce expectations the Fed will keep purchasing bonds at a pace of $85 billion a month.

As long as it looks like central banks are on your side and on investors' side as far as providing more liquidity, that's going to help improve sentiment.

A strong commitment from the Fed to continue its stimulative policy, coupled with corporate earnings that have mostly exceeded lowered forecasts, could help Wall Street extend a rally despite signs that the U.S. economic recovery is losing momentum.

A heavy slate of key economic indicators will be released next week, including personal income and spending, the Institute for Supply Management's manufacturing and services activity indexes, pending home sales, the Chicago purchasing managers' index and consumer confidence from the Conference Board.

The market has been rallying on the fact the ECB might actually start to do something; if the U.S. market reacts in the same way, that might get the market rallying.

Right now, markets are going through an adjustment process, trying to figure out just how robust the economy is here and overseas as well.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Technically Speaking

RSI- the RSI indicator has dropped through the "50" line for the first time since the end of February when it had a strong turn down. This would officially marks the end of the third leg of a bullish run and I believe very strongly that it marks the beginning of a reversal or sideways movement.(click to enlarge)

MACD- while it is true that the RSI continues to show weakness, one thing that I see in the MACD indicator is that momentum is still in bullish territory. Until I see the MAs move into bearish territory all I can say is it looks like the stock is slowing down, I cannot say it's going to reverse and turn around because momentum is still in bullish territory.

Bollinger Bands- this is the third time we have seen this pattern as of bottom Bollinger band is now been sideways. The last two times we saw this is when the stock down like this and ended up forming a step as he continued to move up. But this time short term momentum appears to be weaker than it was the other times so I am interested in seeing if the Bollinger bands will turn down instead of sideways and then back up.

Summary- unless the stock is built the many foundation that I am observing at the top, my experience would tell me that it's continued bullish run is at an end. I make these observations based upon many years of experience looking at different chart patterns. Time will tell.

Current Events

Apple may have lost nearly half of its value since its peak in September, but it's still the talk of the town. Only this time, it's all about how low can it go?

Wall Street would normally be set for a technical rebound after a drop of more than 2 percent, the worst weekly decline so far this year. But that could easily change by the time the iPhone maker reports its earnings, which are due on Tuesday after the closing bell.

Wall Street has been recently pressured by a slew of disappointing economic data and weaker-than-expected earnings reports from blue-chip companies like IBM. Of the companies that have reported, 67.3 percent have beaten analysts' earnings expectations, while just 43.3 percent have beaten revenue estimates. Revenue growth is seen at just 0.7 percent for the first quarter over the year-ago period.

Economic indicators in the coming week will cover housing, manufacturing and a first look at first-quarter gross domestic product. In the housing sector, March figures for existing home sales are due on Monday and new home sales on Tuesday. Economists polled by Reuters have forecast slight gains in both March existing and new home sales over February figures.

On Friday, Wall Street will get a snapshot of the broad economy, measured by gross domestic product, or the output of all goods and services inside U.S. borders. First-quarter GDP is forecast to have grown at an annual rate of 3 percent, compared with growth at an annual pace of just 0.4 percent for the fourth quarter.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Technically Speaking

RSI-I have written about my observations of negative divergence taking place with the RSI indicator and the MACD indicator for the last three weeks, but now I am noticing consolidation as we have higher lows and lower highs and the stock continues to move up. This is a new (click to enlarge)observation to me so I'm not quite sure how it's going to play out so I intend to watch it. If the stock continues to move up I can understand why because this last move before it had a little backup didn't even hit above the oversold position so it's still has strength.

MACD-The MACD indicator almost looks like it is in a bullish consolidation pattern as it continues have higher lows and lower highs. This is an interesting observation since the RSI indicator is doing the same thing but the stock continues to move up it will be interesting to watch this pattern and see how it plays out.

Bollinger Bands-It appears that the aggressive bullish move this week has the stock pushing through the upper band and on Friday it finally pulled back a little bit. Being at the top of the band, I wouldn't be surprised if the stock pulled back now but I believe the earnings reports this week may dictate whether the stock continues to move up along the upper band or bounces back to either the middle or lower band.

In Summary-Even though I have written about continued weakness in the move of the S&P 500, I still see strength in this move and I am interested to see how it plays out because the formation and watching is new to me. It looks like the indicators are consolidating with a strong bullish emphasis while stock continues to move up. I'm not sure if this means the stock is going to move sideways for a little bit and then continue up or if it's just going to move sideways and then go down. I will be interested in seeing how this plays out.

Current Events

It has taken less than four months for the S&P to surpass year-end 2013 targets of about two-thirds of the strategists polled by Thomson Reuters in December. Of 47 analysts surveyed, 30 of them expected to see this year end at a level already exceeded by the index.

"The only thing that happens now is do we start to see something in the company earnings reports - these are really important because that is where the rubber meets the road," said Gordon Charlop, managing director at Rosenblatt Securities in New York.

Next week 74 S&P companies are expected to report results, across a wide swath of sectors. Financials dominate the week, including reports from American Express Co (AXP.N), Goldman Sachs (GS.N), Bank of America (BAC.N) and Citigroup Inc (C.N).

Cyprus

In approving a 10 billion euro package, Europeans called on Cyprus to find an additional 6 billion euros to cover what is now a larger funding hole. In other words, it now needs to generate a total of 13 billion euros. This is a huge amount for a country the size of Cyprus, even after it goes after uninsured deposits in local bank accounts.

All this confirms what I argued a week ago - namely, that "anyone even remotely familiar with the details of the Cypriot program realizes that the country is a long way away from what [a Troika official claimed to be] "a durable and fully financed solution," let alone a sustainable path towards recovery."

Despite losing control of both growth and funding dimensions, European officials are yet to find the courage to recognize publicly what must be crystal clear to them in private (and was evident to others a week ago): "Key assumptions of the program are outdated if not totally obsolete."

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.