Yearly Sp500 Guide Posts

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The yearly candlestick chart of the sp500 is indeed one of the most powerful technical analysis charts in the current multi decade time frame.  The yearly time frame is the maximum time frame in technical analysis and identifies massive bull or bear markets and massive support and resistance levels.

What we can see from the current yearly sp500 candlestick chart is that the sp500 has been trading in a massive trading range since the year 2000.  Before the year 2000 was a raging bull market in equities, a slow and normal trending market.  That was the mega bull future generations will look at in total awe.

But since 2000 the market has been in a highly volatile trading range state.  We see now that the sp500 has been trading the last 3 years (including this year) in an upward recovery trajectory.

For longer term purposes I think it is very prudent to look at the context of the sp500 now within this large trading range.  The fact is that since the March 2009 low of 666 in the sp500 the sp500 has traded higher until today on the order of 100%.  That is a huge move.

The percentage move from the LOW of 2009 to the HIGH of 2009 was about 70%.  The percentage move from the LOW of 2010 to the HIGH of 2010 was about 25%.

Currently the LOW of 2011 is 1249.  A move to 1470 would be about 17.5%.  But a move from the current level of today to 1470 is only about 10%.

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sp500 Resting with 3 Doji Candlesticks

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The sp500 during the last 3 trading days has printed three doji candlestick formations.  For now I suspect that these three dojis are just a simple pause in the up trend.  There has so far been now hard down reaction after any one of these dojis.

I have seen several dojis like this cluster before and at least in recent memory a lot of them have simply meant a pause in the trend describing a pattern where prices imply drifts sideways to rest and then finds the uptrend for a new move higher.

The Russell 2000 is already well into new high ground, the DJIA is trying to push to new highs and the sp500 is slightly under the old 52 week high.

I do not see anything immediately bearish about the McClellan summation index at the present time.

I can see the Russell 2000 supported on a pull back to 838 and the DJIA on a pull back to 12260.  The sp500 is still trading above the near term support of 1332 now.  Ideally for the near term continued bullish case it would keep trading above this level either sideways or only slightly down.

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Gold is a Great Trend Buy Right Now

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Today the Gold price finally got the job done.  The GLD was flirting with new all time highs for a whole month and teasing both the bears and the bulls.  With today’s very clear sign of strength, the GLD ETF and the DGP ETF is a very clear trend buy right now for more upside in the months ahead.  This is about as low a risk trend buy as you will see in any market.  Day’s like today are the kinds of days traders wait a long time for.  They provide very little doubt about what the next trend will be and are a huge clue and ‘cheat sheet’ for traders.

Before today, I think still one could have made some bearish arguments for gold, but today’s move decisively puts the daily MACD and the WEEKLY MACD in buy trend mode and I expect plenty of upside from here.

Pretty much the same can be said of the GDX mining ETF.

BestOnlineTrades.com has been talking about how Silver has been leading the markets to new all time highs, then gold was in second place and the Russell 2000 third and the sp500 maybe last.  Silver continues to move higher after the successful very low volume retest about a week ago.  This was a key sign that the silver market was not ready to fall apart despite all the top picking attempts.

I really hate to overplay the ‘Marty Armstrong June 13, 2011’ 8.6 year turning point but once again I find myself thinking about this key date as we see the gold price blast higher today to a new life time high breakout.

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Long VG Vonage Holdings Today at 4.68

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I went long VG today at 4.68 as Vonage Holdings seems ready to break above the recent triangular down trend line and trade a full candlestick body above this down trend.  I would like to stay long VG for a week or two or three as a possible swing trade.

There is nothing ‘magical’ about this trade, but it appears to be a small to mid cap stock that is in a growing business with some near term momentum.  So this is a trade, nothing more.  I am not looking for a miracle here, but would certainly like to see some nice upside going forward.

VG has had about a 1.5 month sideways consolidation up until today and is constructive for a new move higher.  The major challenge level is the 4.94 swing high on high volume that occurred on 2/15/2011.  I suspect there will be a bit of selling near that level and maybe even a handle of a cup and handle type situation developing.

I am willing to take ‘pain’ slightly below 4.5 assuming that does occur, but would then like to see a quick resumption of uptrend.

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sp500 Working on a Weekly MACD Histogram Buy Signal

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The sp500 today formed a doji candlestick which simply means we are either at a pausing juncture in the short term or a reversal juncture.  This doji today formed after last Friday’s ‘false shooting star’ candlestick.  I call it a false shooting star because the topping tail was not long enough and the close was not bearish at all.

The sp500 has not closed into this green shaded zone that I have referred to several times before.  The green shaded zone is simply a close above the 1332 range which puts the market in an area of much less resistance.  We could easily close back under that zone again depending on what mood the market is in the rest of this week, but for now it appears that today is simply a pause in the uptrend and that we are on our way eventually to new 52 week highs in the sp500.

As pointed out in a previous post, the Russell 2000 is already at this stage, as well at the Dow Transports and maybe a couple other indices.  Certainly it is not a guarantee that the sp500 will do the same, but it does appear now quite likely given the behavior of other leading indices.

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GLD ETF Pulls a Rabbit Out of the Hat

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The gold price managed to pull a rabbit out of the hat today and blast higher, which structured the weekly MACD into bullish crossover mode.  As of yesterday there was a risk that the GLD ETF would not be able to achieve a bullish weekly crossover and that instead we would see a ‘bear kiss’ of the weekly trend which would have put the gold price at risk of a possible break down.

Instead this ‘miracle worker’ of a commodity busted higher today and now situates the gold price in a stance for a new life time high type breakout which could be quite dramatic.  I should say though that every time I have expected or anticipated the gold price to somehow shoot up 100 dollars in a day, it has ALWAYS disappointed me and instead trickled up like molasses keeping under the radar of almost every market watcher.

The weekly chart of the GLD is indicating that the breakout should occur during the next two weeks assuming upward momentum holds on the current up trend line.

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Quarterly Chart Review of QQQ and sp500

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One of the longest most slowly moving price charts is the quarterly price chart.  It is always a good idea to review this chart after every quarter or two to be sure one is correct on the markets longer term intentions.

The quarterly chart is akin to a large oil tanker.  Once it has started cruising in a given direction it is very unlikely going to change that direction unless acted upon by a very significant force.  The current ‘action’ that appears to be driving the market is the easy monetary policy and this does not seem ready to dramatically change any time soon.

The current factual state of the markets are that we have a bullish quarterly MACD Crossover.  This crossover is in an early state of crossover which basically means that the bullish trend implied by this crossover is just beginning.  In addition the quarterly MACD signal line is just now in the process of crossing above the zero line, another longer term bullish sign.

The last time the quarterly MACD had a bullish crossover was in late 2004.  That led to generally rising prices for almost 3 full years in the sp500.  It could very well be that the most recent quarterly bullish crossover will also lead to rising stock market prices for 1 to 3 years or maybe more.  The current ‘news’ does not seem to support this idea, but relying on news for market direction was never a good idea anyway.

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Is the SLV ETF Still a Good Long From Here

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A comment poster wrote me and asked me if I thought the SLV ETF was a good long from the 37 level.  My response would be that one should be keenly aware that the SLV has already made a huge move from early February 2011 up until the present time frame.  Early February 2011 was the ‘easy buy’.

Now the SLV is in a more mature advance stage and I think if one is going to go long from here it should be more a shorter term swing trade long position with a tightly controlled stop.

Why? Because even though momentum still looks quite strong, the chances for more technical selling coming in more heavily are more likely during this stage.  So if one gets too complacent, there is the risk of getting caught in a big profit taking wave.

So, I would say that if I were to go long the SLV from here I would try to do it from 37 or slightly under and then set a protective stop loss at 35.70.  That would put the stop loss right under the recent break out area.  Assuming an entry at 37 and then assuming the stop loss gets hit the same day or next day it would equate to a loss of 3.51%.

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Russell 2000 Closes at New 52 Week High Today

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The Russell 2000 is falling into its traditional role of early market leader and today closed at a new 52 week high and above the swing high that started the ‘mini earthquake bear’.

I suspect that the other major indices will soon follow suit to the upside.  The Dow Jones Industrial average almost tagged the 2/18/11 swing high today but then sold off a bit near the close.  It is possible that we could see a day or two of downside consolidation since we are at the previous highs on a number of indices.  However, after that I would expect the markets to trend higher again.

The sp500 managed to completely evade the large quarterly shooting star candlestick by trading higher in almost straight up during the last 9 trading days.  This was an astonishing feat because there was real potential for the quarterly candlestick to turn into a very bearish longer term signal.  But instead it now just looks like another typical bullish candlestick that we have become so used to seeing lately on the indices.

The monthly candle in the sp500 now looks like a very long bottoming tail doji hammer reversal candlestick which has the potential to lead to a big up month in April 2011.  The problem with this candle is that it can also be interpreted as bearish hanging man candlestick since it is at the top of a huge price advance.  So it will need confirmation of the bearish setup or a rejection.  A rejection would mean we simply trade higher up into April 2011 which appears likely.

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All Systems Go on the Sp500

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The sp500 continues to show near term trend strength and continues to trade within the ‘neutral zone’ I have referred to in previous charts.  Today was an important test of the mini bear trend line and a sound rejection of it if we look at the candlestick structure.  A closing on the highs and a small bottoming tail which reflects the test of the mini bear trend line.

The NYSE summation index is now in a more bullish stance and is close to trend strength which should support the upside over the next several days as we get into the end of the quarter (only 2 days away now).  End of quarter and end of month window dressing appears to be playing an important role this week.

I would not be surprised to see this market attempt a shot at new 52 week highs in a week or two.

The daily MACD is about to cross above the zero line, another bullish sign.  Of course volume was typically light on the advance which has always been a problem with this market.  I have learned the hard way to give price the benefit of the doubt over volume during up trends. 

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