LunaticTrader

Investing with the Moon

Key reversal levels for week of June 24, 2013

Posted by Danny on June 22, 2013

Our key reversal levels going into next week:

Status Key (W) Mode Key (D)
Nasdaq BULL S: 3238 DECLINE R: 3450
S&P 500 BULL S: 1541 DECLINE R: 1640
Nikkei BULL S: 11933 DECLINE R: 13692
FTSE 100 BEAR * R: 6384 DECLINE R: 6506
DAX BEAR * R: 8092 DECLINE R: 8241
Bonds (TLT) BEAR R: 119.29 DECLINE R: 115.22
Gold (spot) BEAR R: 1530 DECLINE R: 1389
Euro/US$ BULL S: 1.2959 RALLY S: 1.3100
Crude Oil(CL) BULL S: 91.35 DECLINE * R: 96.77

(Legend: W = weekly, D = daily, R = resistance, S = support, * = change from previous week/day)

Some interesting developments last week.

The Dax and FTSE 100 have closed below their weekly key levels, and have thus shifted into bear status. The US markets and Nikkei still have some breathing room, so they remain in bull status for the moment.
Most of the time the major stock markets are highly correlated, so when we have a situation like this then it usually gets resolved in one of two ways. Either the Nasdaq, S&P 500 and Nikkei will go into bear status as well, or the Dax and FTSE 100 will rebound and get back into bull status. We have to wait and see.
E.g. in the case of the S&P 500 index it will now take a daily close above 1640 to switch into rally mode again. A weekly close below 1541 would set it back into bear status.

Oil has fallen below its daily key reversal and is now in declining mode. It would take a daily close above $96.77 (nearest futures basis) to signal a continuation of the rally. A further drop below $91.35 on a weekly closing basis would switch oil into bear status.

Gold has come crashing down last week. Notice how its daily key reversal is now down to $1398 (was $1422 just a few weeks ago). The key reversal will keep shifting down until gold eventually manages to get above it. This is how these key levels work, they are a bit like the parabolic SAR indicator but generally keep you in for a bigger part of the move.

These key reversal levels and status/mode indications are meant as a general market orientation, they do not try to pick the tops or bottoms.

Stay tuned for some other interesting uses of these key levels.

Danny

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