With US stocks flirting with record highs and charts showing no negative divergence, there is very little to comment on the direction of the stock markets.
In today's post we take note of the fact that since bottoming out in 2009, the corrective rallied have not exceeded the 38.2% Fibo retracement. Let us look at the details -
2009 low - 2010 high (blue) -...
Dow's rebound from 50-DMA on Wednesday if followed by a day end closing above the channel resistance today would suggest the rally from post Brexit lows has resumed and the prices could head towards recent cyclical high of 18,167 levels.
On the other hand, failure to take out channel resistance followed by a day end closing below 50-DMA level of 17,747 would...
Dow’s sell-off from the critical resistance of 18,000 to 50-DMA of 17,743 today suggests correction from June 27 low of 17060 has ended and the index could see sideways to bearish move today.
On the downside, doors remain open for a relook at 17,538 (23.6% of Feb low-Apr high).
On the higher side, only a daily closing above 18K would indicate a...
Resistance – 17,784, 17,892, 18,018
Support – 17,714, 17,652, 17,589
Dow’s recovery of today’s low of 17,657 followed by a move back above 17,714 (61.8% of 18,118-17,060) following Wednesday’s bullish closing would open doors for a rally to 17,892 (78.6% of 18,118-17,060) levels.
On the lower side, 174,714 is a good support, which if breached could...
Dow’s failure to take out 17374 despite sharp rebound following a bullish price RSI divergence on the hourly chart could push the 17,267 (200-DMA) in which case the index could re-test recent low of 17,060.
On the other hand, a beak above 17,374 could signal continuation of the rebound from 17,060 and open up 17,534 levels.
Investing.com provides average year end forecast of 18050 for the DJIA based on the April poll of 25 analysts. How realistic is this target? The DJIA is currently trading at about 19x trailing earnings while the historical average of 15 is about 20% lower at around 14000 range. The market lows of last August and January of 15500 range was around 16.6 x trailing...
Break above 17,947 (falling channel resistance + 50% Fibo retracement) would fuel a rise to point D at 17,987 (78.6% of XC), where bears are likely to come in.
Major part of the rally in US stocks since late 2012 appears to have been fuelled by Yen carry trade. Remember Bank of Japan was the first one to fire and the stage was set after Abe came to power. BOJ announced easing in April 2013 and followed it with another surprise in October 2014.
BOJ's aggressive actions also forced ECB and other central banks to press the...
Resistance – 17,758, 17,811 (Apr 1 high), 17,934 (May 10 high)
Support – 17,638, 17,539 (23.6% of Feb low-Apr high), 17,418 (May 18 low).
Daily chart pattern – Falling channel
Sharp rally seen yesterday pushed up RSI back above 50.00. Given the futures are trading 70 points higher, the index is likely to open around 17,758 (channel resistance).
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A big bearish wedge has appeared on SPX500. Will it bounce from here up and upwards to its upper boundary at about 2200 and then crash? Or will we see a crash much sooner?
