Last week was simply a continuation of the previous weeks rally. I know what everybody is thinking; how could he say that after Friday's unemployment numbers coming out so horrible. They are so bad that no one even wants to talk about them (I sure don't). The reality is what if the market doesn't care right now? What if the market is looking past these numbers like it has been doing with all of the other bad news we have been getting.
Over the weekend I had a conversation with a couple of my friends that are in the financial planning business and they asked me how I could still be bullish with all of this bad news and around a 7.5% percent rally in a couple of weeks. I said to them the best way for me to be a successful trader is to go to the charts for my answers. I told them if I just listened to the news I would always be short and I would probably never leave my house unless it was to start collecting can goods and stocking up on bottle water due to fear that world is ending.
For my answers I go to the charts. That is my church and the charts are what have given me the ability to look past all of the news and chatter to find out what the market is really thinking. As of right now I am sticking with the bullish trend. I still believe that we will see a test of the highs of the year by the end of summer. I say this because of the action that I am seeing in the market. In the past two weeks I have seen some of the most impressive buying that I have seen in long time. After that ISM number on July 1st the market took off and stayed bid. That was amazing bullish action and it felt like institutional buying along with money managers and hedge funds chasing the market. We still have yet to dip back into that initial rally (1324.75 - 1316.75 E-mini futures prices; see charts below). Even with those horrible unemployment numbers on Friday this is bullish action.
It is not all good news for the bulls they still have some work to do. As of right now we have non-confirmation pertaining to the Dow Theory. We have an unbelievably strong Dow Transports making new highs of the year while the Dow Industrials failed to confirm by not making new highs. This is a non-confirmation but this verdict is untold.
The next thorn in the side of the bulls is the MACD. I use the MACD to see the strength of the recent move versus the previous move at these prices. I look for divergence. Right now we have higher highs in the MACD but not higher highs in the market (except for the Dow Transports). This is signalling that we may be nearing a short term top. If the market cannot make new highs with a higher MACD this may give the bears a reason to step back in and try to sell this market.
I will be watching all of these things closely along with my other indicators throughout the week. If you are interested in reading my day to day thoughts check out my Morning Brief.
Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day).
Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year
 |
| $ES_F |
 |
| $SPX |
 |
| $ES_F |
 |
| $DJI |
 |
| $DJT |
 |
| $NQ_F |
 |
| $VIX |
 |
| Another thorn in the side of the longs could be the single ticks that we left above on Friday from 1342.75 - 1346.75. If these do not get filled in we could test the low of last weeks range at 1326.50. |
www.eminiexecutors.com 239-594-6876 info@eminiexecutors.com
No comments:
Post a Comment