Only few days passed since my last post (pls see the link below), and what did we see? Swings up, swings down (especially in European equities but also in US), volatility is increasing. Until the ECB decision next week it may stay like this, but if you look at the charts with a technical view, you have to realise how sick this market is. I think regardless of European QE, the picture is getting more and more bearish.
Weekly (Heiken Ashi candles):
Not much change since my last post in terms of Price, but there is another red Heiken Ashi candle and the indicators below the chart are getting firm bearish.
Daily (regular candles):
The big picture in terms of Ichimoku set up is neutral with bearish bias. Price is approximately swinging around "equilibrium" level, enterred a very thick Kumo, which itself is neutral, non trending territory, but we have further bearish signals now:
- failed break back above the Kumo, and maybe we had the right shoulder in with lower high?
- Medium strong Tenkan/Kijun bearish cross
- Bearish Senkou Span cross (future Kumo twist)
- Slow Stoch is down again, MACD is firm bearish
Short term the last key support is 2000. If it closes below then next tgt is the bottom of the Kumo at 1950. please note that the weekly Kijun Sen is ard 1950 as well as a support.
4 Hrs (Heiken Ashi candles):
Tried to break back above Kumo and 100 WMA yesterday, but failed. Actually Price is trading in a tightenning triangle with a thin and flat Kumo above. So far Price could not make a lower low, who knows, maybe we see some spike again today. Tenkan/Kijun made a medium bearish sell signal, and Chikou is swinging around Price and DMI is also unclear a bit. Once it looks possible bullish reversal, next it looks a chance for bearish extension. In fact it is neutral/bearish now. I think we have to wait for the break of the triangle.
Summary: it is not easy to trade equities, as there is too much noise and relatively high short term volatility. As we see, equity prices are totally decoupled from Oil, High Yield credit, Gold, etc. Why? There is a one thing keeping alive the bulls: the expectation for more liquidity, more money printing in form of QE. Equity markets have become totally dependent on Central Banks' policy, and I think pricings in general are totally overvalued. Once this sentiment gets a hit, and investors start sufferring from any kind of general risk, we can see a serious correction... if not a krach. Ah, one more thing: everybody is long equities, and of course it is not easy to break such a long term consensus trade, but once sentiment changes, the exit will be too tight.
Looking at the higher time frames my strategy for this year is to always sell some smalls on spikes and hold a reasonable non-leveraged short position.
Weekly (Heiken Ashi candles):
Not much change since my last post in terms of Price, but there is another red Heiken Ashi candle and the indicators below the chart are getting firm bearish.
Daily (regular candles):
The big picture in terms of Ichimoku set up is neutral with bearish bias. Price is approximately swinging around "equilibrium" level, enterred a very thick Kumo, which itself is neutral, non trending territory, but we have further bearish signals now:
- failed break back above the Kumo, and maybe we had the right shoulder in with lower high?
- Medium strong Tenkan/Kijun bearish cross
- Bearish Senkou Span cross (future Kumo twist)
- Slow Stoch is down again, MACD is firm bearish
Short term the last key support is 2000. If it closes below then next tgt is the bottom of the Kumo at 1950. please note that the weekly Kijun Sen is ard 1950 as well as a support.
4 Hrs (Heiken Ashi candles):
Tried to break back above Kumo and 100 WMA yesterday, but failed. Actually Price is trading in a tightenning triangle with a thin and flat Kumo above. So far Price could not make a lower low, who knows, maybe we see some spike again today. Tenkan/Kijun made a medium bearish sell signal, and Chikou is swinging around Price and DMI is also unclear a bit. Once it looks possible bullish reversal, next it looks a chance for bearish extension. In fact it is neutral/bearish now. I think we have to wait for the break of the triangle.
Summary: it is not easy to trade equities, as there is too much noise and relatively high short term volatility. As we see, equity prices are totally decoupled from Oil, High Yield credit, Gold, etc. Why? There is a one thing keeping alive the bulls: the expectation for more liquidity, more money printing in form of QE. Equity markets have become totally dependent on Central Banks' policy, and I think pricings in general are totally overvalued. Once this sentiment gets a hit, and investors start sufferring from any kind of general risk, we can see a serious correction... if not a krach. Ah, one more thing: everybody is long equities, and of course it is not easy to break such a long term consensus trade, but once sentiment changes, the exit will be too tight.
Looking at the higher time frames my strategy for this year is to always sell some smalls on spikes and hold a reasonable non-leveraged short position.
