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Andrew Coles (UK) and David Hawkins (USA), authors of forthcoming book (May 3) for Bloomberg Press and John Wiley entitled, MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets. http://eu.wiley.com/WileyCDA/WileyTitle/productCd-1576603725.html... More
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Midas Market Analysis
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MIDAS Market Analysis
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MIDAS Technical Analysis: A VWAP Approach to Trading and Investing in Today's Markets
  • S&P 500 – Consolidating And Declining

    by David G. Hawkins

    Intermediate Term Timeframe - Weekly Bars Chart

    The first chart here is the weekly bars chart. We see that the TopFinder, right most purple curve, has just ended, right where it was projected to end, between the two dashed vertical lines. This means that the accelerated uptrend that began in June is over. Indeed, price has already been in a consolidation at this top for several weeks.

    Look now at the somewhat longer term uptrend that began one year ago. It has had two complete cycles of higher highs and higher lows, and is now at a third higher high. Notice that the second up cycle, from Nov. '11 through April '12, was also followed by a TopFinder, left most purple curve, which likewise ended in a consolidation before price pulled back to the next higher low. It would be too easy to just assume that now price is going to sink down to another higher low, just as it did in the previous cycle. And indeed that could well happen. But I must remind everyone that the ending of a TopFinder does NOT predict what will happen next, other than to expect at least a short consolidation. We will only know what happens next once price breaks out of the consolidation, either up or down.

    (click to enlarge)

    ...

    Short Term - Daily Bars Chart

    The second chart here is the daily bars chart. In my last post here, I noted that price had just come down to and supported at S3. I said, "The uptrend since last July will end when price definitively breaks below the latest S curve". Since then, price sprang up for over a week, formed a double top with the previous high, then sank down and did definitively break below S3. So, the uptrend that started last July (which is a different uptrend from the one discussed on the weekly bars chart) has ended.

    Look at the structure of this chart since early September. Not only has price broken below S3, but price is also below the previous low of Sept. 25th, so this is a lower low, which indicates we're in a new downtrend. Furthermore, as of this present time, price is breaking support (S3) while holding below resistance (the new R1), and that is the Midas definition of a downtrend. This downtrend will continue until price breaks above the lastest resistance curve.

    (click to enlarge)

    Oct 16 11:54 AM | Link | Comment!
  • S&P 500 On Short To Very Long Term

    by David G. Hawkins

    Here, being the end of the month and the quarter, I'm reviewing the monthly bars (long term) and the quarterly bars (very long term) charts. But first we'll look at the short term (daily) chart since there's been some changes on that since our last post.

    Short Term - Daily Bars Chart

    The first chart here is the daily bars chat, which you should compare to the one in my last post here. At that time, I noted the very strong upward response of the market to both the European and the U. S. central banks' announcements of significant quantitative easing. I opined that this was probably the start of an accelerated up trend, and labeled the S curves accordingly. But now we see that the market has retraced half of the gain since the QE announcements, coming down to the S curve launched from Sept. 4 and supporting there. This tells me that we did not get a new accelerated up trend. Indeed, looking at the market and the hierarchy of S curves since the latter part of July, it now is showing us that what we've been having is a simple, mild up trend, with each pullback in price coming down to and supporting at its latest S curve. This gives us no forecasting information, as this behavior could go on indefinitely. The uptrend since July will end when price definitively breaks below the latest S curve.

    (click to enlarge)

    -

    Long Term - Monthly Bars ChartXX

    The second chart here is the monthly bars chart, which you should compare to the one in my post here on Sept. 2. I said then that this looked like the uptrend was loosing steam. But since then, the September bar is in place with significant upward movement above the high of April. So, the uptrend continues, and there's no resistance in sight until the high of 2007.

    (click to enlarge)-

    Very Long Term - Quarterly Bars Chart

    The last chart here is the quarterly bars chart. Compare this with the one I posted on July 1. The chart here today is the update of the second chart of July 1. We see that price continues to move upwards in a slow, steady way, getting closer to the all-time market high. Very importantly, the RSI in the upper pane is edging up, getting even closer to its resistance line (see the discussion of this in the July 1 post). So, in the next 1 to 2 quarters, both price and the RSI will probably test their resistances, which will be a very significant turning point. If they break above these resistances, we're off to the start of a major new very long term bull market. But if they turn down, the likely interpretation will be that the market will have formed a triple top and probably will go significantly lower.

    (click to enlarge)

    Sep 30 8:38 PM | Link | Comment!
  • S&P 500 – Uptrends Now Very Convincing!

    by David G. Hawkins

    Just two days after my last post here, the European Central Bank (ECB) delivered the first of two positive surprises, a large quantitative easing (QE) program. And five days later, the U. S. Federal Reserve (Fed) surprised the market with QE3, much larger and more open ended than anyone had anticipated. The market has responded to these two pleasant events by starting a robust new accelerated up trend.

    Short Term - Daily Bars Chart

    The first chart here is the daily bars chart. You can see the two tall recent candles, one on Sept. 6th (the ECB's QE day) and the other on Sept. 13th in response to QE3. Two days prior to the ECB's day, price again came down to and touched the (old) S2 curve and the next day modestly lifted, so I've started a new S1 curve from there. Then came the ECB QE which blasted the market above the August high, then two days later drifted up to and turned down from the upper gray line which marks the minor resistance established by the May 2008 high of 1422.4 (see monthly bars chart in my last post here). Sept. 11th was a pullback, and two days later came the Fed's QE3, propelling the market upward into uncharted territory. I've started a new S2 from the 9/11 pullback. We see that the recent pullback didn't come anywhere close to the new S1 curve, so that establishes this new uptrend as accelerated. I'm not yet fitting a TopFinder to this accelerated up trend as it's still so new, with only a small number of price bars in it so far.

    In my last post here, I displayed my Accumulation/Distribution chart which showed "red above green", the indication of weakness behind the scenes. But with this new accelerated up trend, that chart (not shown here) is now showing green above red, consistent with strength in a real up trend. Apparently, the "smart money" people have suddenly become believers, and have ended their distributing out of the market.

    (click to enlarge)

    .

    Intermediate Term - Weekly Bars Chart

    The second chart here is the weekly bars chart. You can see the new upthrusts in the last two weeks. Prior to that there was a sideways to slightly down period of two to three weeks. That chart structure can be considered to be a pullback, the first real one since the beginning of this intermediate term up trend in June. This pullback is WAY above the S curve launched from the June low, so this is now recognized to be an accelerated up trend, and I've fit a TopFinder to the pullback (at the arrow). It is now already 79% complete, projected to end in the vicinity of those two vertical dashed lines, i.e. probably sometime in the first half of October.

    In my chapter on the TopFinder in our book, I showed several examples where a very robust, very long accelerated up trend actually spawned three TopFinders before finally coming to an end. We could very well be early in such an uptrend, with this current TopFinder ending in a few weeks, followed by a pullback and then a liftoff into the next phase of this accelerated up trend. I think that the ECB QE and the Fed's QE3 have fundamentally changed the character of the stock market for at least many months to come.

    (click to enlarge)

    Sep 16 5:23 PM | Link | Comment!
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