LunaticTrader

Investing with the Moon

Posts Tagged ‘China’

Overhead resistance

Posted by Danny on October 12, 2015

Stocks climbed nicely last week, in line with the lunar green period and the favorable setup in my indicators. We have another week of lunar green to go, but the question becomes: how much is left in the tank here? Let’s have a look at the S&P 500 (click image to enlarge it):

S&P 500

We have a nice double bottom in place and the market is clearly in search of new post-crash highs. All my indicators are climbing, but the Earl and MoM are getting quite high now. So, I think the market will start sputtering if it reaches 2050, which is major overhead resistance. It would surprise me if the S&P bursts through 2050 without a noticeable pullback. Investors who bought in the 6 months prior to the August drops did so at 2050 or higher and many of them may be waiting to get out near breakeven after being shocked by the recent declines. All that selling will have to be absorbed before the market can go higher, and that will take time imo.
I don’t think we will see a sharp drop if 2050 is reached, but rather the start of a sideways pause that allows the market to catch its breath.

As chart of the week I am choosing China, which is giving a speculative buy signal in the weekly reversal levels. (click image to enlarge it)

China

The Shanghai Composite has bottomed with major bullish divergences in Earl2 and ESe. Weekly MoM has turned up for the first time since the crash started. This sets the stage for a new climb towards 4000+.

Good luck,
Danny

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Buy China

Posted by Danny on June 23, 2014

Last week I asked: is the bull exhausted? The answer seems to be a resounding no. The S&P 500 has burst into new highs already, so it looks like its quick pullback to 1925 is all we can get as far as ‘corrections’ go in the current environment. The round number 2000, which would be a major milestone for the S&P, is looming large and becomes a magical attractor at this point. It could be reached sooner rather than later.

Let’s have a look at the current chart (click for larger image):

S&P 500

The S&P 500 has broken out of a rising wedge twice, and to the upside! So much for rising wedges being bearish. It has successfully retested the most recent breakout and marched on to higher highs. That’s as convincing as it gets. That doesn’t mean this move cannot fail anymore at this point, but smart investors go with what they see and change their mind when the situation changes. Right now this market is telling us it still wants to go higher.

Technically the picture has improved as well. My short term Earl indicator has made a shallow bottom and is going up again. The slower Earl2 is rather neutral sideways, could push for another high. With another week of lunar green period to go it looks pretty good. Looking at the trend lines, the S&P 500 has room to rise until 2000-2050, where overhead resistance from long term trend channel would be met. The 1900 level is now major support, a drop back below that level would prove the recent breakout false.

Meanwhile, blogs and social media are full with reports suggesting that investor sentiment has become too bullish, suggesting that we must be very close to a major peak. But is that so? Here is a good read exploring that topic: click. “Maybe everyone isn’t so bullish?..”

The one market that hasn’t participated in the worldwide rise in stock prices so far is China. But that could be set to change soon as you can see in this chart of the week. A few months ago I shared an indicator I call adverse move ratio, which I use on monthly charts to determine long term bullish/bearish condition of markets. And right now the adverse move ratio for the Shanghai Composite suggests its bear market is ending (click for larger image):

SSEC

The Chinese stock market has been grinding down for years, much like it did in 2001-2005. In recent months the SSEC has been printing very small candles while flatlining, just like it did in late 2005. This suggests that selling has dried up. And the adverse move ratio is climbing back above 1, signalling the start of a bullish phase. That doesn’t mean we will get another rampant bull market like China experienced in 2006-07, but a climb to 4000 is easily possible. Based on my weekly key reversal levels, the Chinese market will effectively turn bullish on a weekly close above 2079.

Good luck,

Danny

 

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Key reversal levels for week of June 23, 2014

Posted by Danny on June 22, 2014

Comments for this week :

* Continuing bull markets in all major indexes. If the FTSE100 rises a little bit next week we will have a fully bullish picture for stocks again. When and where will it end? Nobody knows. Keeping an eye on the key reversal levels and MoM indicators will tell us when it is time to get out.

* In other world markets we have China as the only remaining bearish market. Gold stocks have also turned the corner and joined the bullish camp this week.

* Bonds (TLT) are stagnating. Can go either way at this point.

* Gold has turned fully bullish, and we can start looking for a possible move towards its Top1 target at $1424.

* The Euro is holding on to the 1.35 level and gave a speculative buy signal last Tuesday when daily MoM turned up. Euro may surprise to the upside and would probably pull gold up with it.

* Oil is digesting recent gains. A further climb towards 109-110 is in the cards as long as oil holds above its daily key reversal level.

* Our weekly key reversal levels for the 30 Dow stocks are available here. 26 stocks are bullish this week, unchanged from 26 last week. Above 20 is healthy, see : Keeping an eye on the Dow stocks.

***

Here are the tables.

Key reversal levels for next week:

Weekly Current Mode Key (W) MoM (W) Weeks % Ch.
Nasdaq 4,368.04 4,045.86 3.61 76 41.40
S&P 500 1,962.87 1,835.21 6.26 81 38.59
Nikkei 15,349.42 14,434.68 1.10 2 0.95
FTSE 100 6,825.20 6,709.16 2.59 7 0.04
DAX 9,987.24 9,339.75 4.83 12 3.80
Bonds (TLT) 111.80 108.87 3.82 21 4.79
Gold (spot) 1,314.27 1,269.95 -1.72 0 0.00
$EURUSD 1.3596 1.3756 -2.13 5 -0.68
Oil (CL) 106.83 100.29 2.41 18 6.70

(Legend: Mode: green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )

Latest daily key reversal levels:

6/20/2014 Current W Mode Key (D) MoM (D) Days % Ch. Str. #
Nasdaq 4,368.04 4,256.75 5.18 21 5.61 17
S&P 500 1,962.87 1,927.11 4.55 21 3.96 1
Nikkei 15,349.42 14,844.17 4.60 21 6.51 1
FTSE 100 6,825.20 6,830.73 -2.57 5 0.70 24
DAX 9,987.24 9,880.09 0.83 42 4.01 1
Bonds (TLT) 111.80 112.48 -1.07 13 0.04 8
Gold (spot) 1,314.27 1,264.53 4.65 6 3.25 1
$EURUSD 1.3596 1.3646 -1.52 30 -1.10 12
Oil (CL) 106.83 103.59 6.25 27 4.83 2

(Legend: Mode : green = bullish, pale green = weak bullish – may have peaked, red = bearish, pink = mildly bearish – may have bottomed | Key: key reversal level | W = weekly mode | for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )

Our current key target zones (we use a +/-1% zone around these targets):

Key Targets Top1 Top2 Bottom1 Bottom2
Nasdaq 4390 4531 3975 3742
S&P 500 1950 2031 1755 1641
Nikkei 15650 17220 13860 12940
FTSE 100 6800 7110 6677 * 6230
DAX 10240 10450 8715 8510
Bonds (TLT) 114.60 115.70 108.25 102
Gold (spot) 1424 1541 1160 1075
$EURUSD 1.3950 1.42 1.3403 * 1.2870
Crude Oil(CL) 109.24 109.97 94.60 91.85

(* = new or updated target ) (for more details about these key targets, see: https://lunatictrader.wordpress.com/2013/08/20/key-target-levels/ )

Stay tuned, Danny

 

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Markets around the world

Posted by Danny on October 20, 2013

Some readers have been asking for my key reversal levels for other markets and indexes.
Here they are for a selection of countries.
Read my earlier posts to understand how to use these tables, see here.

Here are the weekly keys:

Weekly Current BB Key (W) MoM (W) Weeks % Ch
Australia (AORD) 5,321.01 5,047.11 5.78 14 7.33
Brazil (BOVESPA) 55,378.46 51,216.26 3.78 6 3.03
Canada (TSX) 13,136.09 12,596.37 3.68 13 3.56
China (SSEC) 2,193.78 2,117.32 3.37 5 -2.26
Dow Jones Industrials 15,399.65 14,793.38 0.67 41 14.61
France (CAC40) 4,286.03 3,963.17 5.94 14 10.89
Gold stocks (XAU) 92.17 109.64 -2.99 48 -44.80
Hong Kong (HANG SENG) 23,340.10 22,286.57 5.31 11 4.79
India (SENSEX) 20,882.89 19,230.85 2.81 5 4.53
Indonesia (JCI) 4,546.57 4,666.06 -2.01 17 0.49
Italy (MIB) 19,271.02 17,145.81 6.70 11 14.80
Malaysia (KLCI) 1,799.59 1,746.11 1.07 5 1.76
Mexico (IPC) 40,412.69 41,805.91 -0.40 7 0.70
Russell 2000 1,114.77 993.81 6.35 43 31.72
Singapore (STI) 3,192.90 3,223.63 -0.85 2 1.49
South Korea (KOSPI) 2,052.40 1,943.21 6.16 6 4.50
Spain (IBEX35) 10,001.80 8,753.06 8.08 12 19.43
Switzerland (SMI) 8,084.65 7,663.05 1.93 67 30.72

(Legend: BB: green = bullish, red = bearish | Key: key reversal level | MoM: MoM indicator | Weeks: weeks since start of current bullish or bearish trend | % Ch: percent change since start of current trend)
(for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )
(for information about the MoM indicator, see: https://lunatictrader.wordpress.com/2013/09/14/mom-indicator/ )

 

And this is the daily table for next Monday:

Daily Current BB Key (D) MoM (D) Days % Ch
Australia (AORD) 5,321.01 5,191.99 3.25 5 1.76
Brazil (BOVESPA) 55,378.46 53,267.09 5.54 4 2.22
Canada (TSX) 13,136.09 12,822.71 4.60 5 1.87
China (SSEC) 2,193.78 2,177.65 1.41 8 0.11
Dow Jones Industrials 15,399.65 15,110.26 3.02 5 1.11
France (CAC40) 4,286.03 4,146.86 5.64 30 5.96
Gold stocks (XAU) 92.17 93.97 -2.72 20 -3.80
Hong Kong (HANG SENG) 23,340.10 22,962.40 1.83 30 5.27
India (SENSEX) 20,882.89 19,816.47 6.35 27 7.38
Indonesia (JCI) 4,546.57 4,399.94 3.51 9 3.13
Italy (MIB) 19,271.02 18,172.99 8.98 30 13.04
Malaysia (KLCI) 1,799.59 1,772.42 4.70 28 2.65
Mexico (IPC) 40,412.69 40,957.48 -1.73 9 -0.11
Russell 2000 1,114.77 1,064.06 3.43 4 4.57
Singapore (STI) 3,192.90 3,155.55 0.73 3 0.38
South Korea (KOSPI) 2,052.40 1,995.03 6.54 29 6.96
Spain (IBEX35) 10,001.80 9,252.88 9.83 30 15.91
Switzerland (SMI) 8,084.65 7,927.07 1.22 3 1.74

(Legend: BB : green = bullish, red = bearish | Key: key reversal level | MoM: MoM indicator | Days: days since start of current rally or decline | % Ch: percent change since start of current move)
(for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )
(for information about the MoM indicator, see: https://lunatictrader.wordpress.com/2013/09/14/mom-indicator/ )

 

Good luck,
Danny

 

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