Sunday 10 February 2013
All we can do with the stock market indices is draw a few lines and
then draw a few conclusions. It was easier with the SnP, but we
had more words to add for the NAS. The stock market has been
Fed-driven for the past few years as central planners have taken
over, so we no longer see free markets, as more and more freedoms
in other areas are being trampled over by puppet politicians.
Sometimes there is no need for any sophisticated computer models
of myriad mechanical tools like MAs, RSIs, MACD, etc. All one need do is follow the obvious for as long as the obvious remains so. At
least that is how central planners seem to work.
Buy breaks and hold until it stops working.
No comment required.
The Fed used to run monetary policy, which has not worked in over
100 years, so now they are running the markets, along with
everything else.
At least the NAS has more points of interest against which to gauge how price responds to them. The long-standing half-way
retracement between the 2000 high and 2002 low has been 2841
ever since the 2002 low. Last September, NAS tested it and price
backed off. Notice how small the range was. It reflected a lack of
demand, and selling stepped in, at least for a few months.
The last two months are small ranges, a lack of demand, but there
has been a total lack of supply, so as long as price goes higher,
stay with it. Close stops at this late stage would be a good idea.
Small bar rallies can mean a lack of demand, but when they persist,
as in the November 2011 to April 2012 rally, the steady grind higher
is the market's way of punishing shorts who know no better than to
ignore a simple trend. Tuition for ignoring trends is so high for so easy a concept.
We see another small bar rally since January 2013, but the slope of
the rally is shallower, and the bars are overlapping. Overlapping bars tell of a battle between buyers and sellers, but buyers are still
winning. Whatever strategy one might have in stocks, staying away
from the short side should be at the top of the list.
Wait and see HOW price responds to the 2872 highs. Then, you will
be better informed as to what the market is doing, eliminating any
guesswork. Guesswork also has high tuition costs, but they are at least voluntary.
Price could have gone either way out of the 27 day TR, but the
smart money was on the upper end for a resolve. You had the SnP
as a guide, and the fact that the NAS TR gave back so little ground
during the corrective phase suggested accumulation.
How price responds to the overhead resistance, which everyone
sees will be valuable information in formulating the next plan. Do not change the current one, unless it is on the short side.
Hard to ignore such an easy message in these two markets.
