Market Timing

Here Comes the Bounce

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This morning I was looking at the 60 minute 20 day trading chart of the sp500 on Power Etrade Pro.  The last hours bar of yesterday (6/1/2010) was a big red down candle and it looked ominous.  So when trading started today I began to realize that there was not going to be any downside follow through.  Then I also realized that that big down candle was the right shoulder of a head and shoulders bottoming pattern on the 60 minute chart.

So the rest is history and now the market is in full bounce and short covering mode.

This was my original forecast after I identified the Adam and Eve double bottom.  But the action of 6/1/2010 was a really confusing head fake because that one day’s price action was enough to turn the daily MACD indicator DOWN and had me thinking we were setting up for total collapse without delay similar to the September 2008 period.

But alas, the market rejected that scenario and is now in full bounce mode off of this Adam and Eve double bottom.

I suspect that the employment report this Friday is going to be good enough to send the market higher and then eventually into the 1150 –1170 range.  The key question is how long this will take ?

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SPY does a Bullish Spring of the May 6 2010 Mini Crash Swing Low

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The SPDR S&P 500 ETF today accomplished a bullish spring of the May 6, 2010 mini crash swing low during the last 2 hours of trading today.  A bullish spring is when volume is not sufficiently heavy enough relative to previous swings and closing price is above those previous swings.

It was a close call today because the way the market was set up (including macd histogram, RSI and some other indicators) it really needed to get a good reversal going again otherwise it would have put the market at risk of a very severe plunge below May 6, 2010 support.  It just goes to show how the market is capable of putting everything on the line with only a few hours left to finally give the reversal signal.  The action today had the flavor of capitulation and leaves me much more confident that a true reversal is at hand.  How high the bounce is remains an open question however.

Also helping the bounce case is the US Dollar Index.  It looks like it double topped today on the daily chart and should get some type of move back down to its own 50 day moving average.  Perhaps that will support equities for the next 5 to 10 trading days.

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The Crude Oil USO ETF trade did not work out

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I was stopped out of the USO United States Oil Fund LP long trade I mentioned yesterday.  I think Murphy’s low applies here, what can go wrong will go wrong especially when it comes to picking spike bottoms. Crude Oil has moved into an even deeper oversold region and it could still be forming an … Read more

I just went long the United States Oil Fund LP ETF USO

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Going long the United States Oil Fund LP (ETF) USO or the ProShares Trust ProShares Ultra DJ-UBS Crude Oil UCO ETF may be one of the most attractive trades I have seen in a long time.  It looks like it is an outstanding contrary type trade. I already mentioned that I am expecting a bounce … Read more