by winston » Mon Jan 21, 2019 8:37 am
CHARTS
The indices spent the week moving through more resistance, taking out the 50 day MA's, the Fibonacci retracements, and Friday moved through the barrier at the bottom of the trading ranges (though NASDAQ was already there). A very important move obviously. It speaks for itself.
Of course, when the indices are in such a big hole after December's selloff, moving back up results in taking on resistance after resistance. More is to come, and don't forget, this could just be a third upside leg in a relief move after the breakdown from the massive yearlong 2018 topping pattern.
Thus, we are enjoying the upside for sure with good positions already letting us bank gain and more to come. But, there is a long, long way to new highs and the top is disrupted at this point. Many are now convinced that the bear market of December is over and that a new or continuing bull market is in place.
Certainly there are good patterns that developed over the time of the rally, just as I said could be the case several weeks back. Those have set up the upside move and more are set up and breaking higher as well. Very encouraging as rallies MUST have leadership to succeed. They are getting it as well as others coming up from downtrends and reversing their action. To survive a rally needs that.
Again, however, this rally does not mean the top is obviated. We play the moves the market presents. You also keep in mind the top and watch for actions that start to cut against the upside move continuing, e.g. TEAM announcing great earnings doubling expectations, gapping higher but then reversing. That is just one case, but if it happens again and again, that is a warning sign. Thus far, it has been limited and the market is into its third leg.
NASDAQ: NASDAQ gapped upside to a doji, tapping the 100% retracement of the selloff from the first recovery peak of the December selloff. A bit of resistance there, but after moving through 7000, 7400 to 7450 is more likely a recovery level.
SP500: Gapped and rallied, putting more distance on the 50 day MA and breaking up through the bottom of the October/December trading range. Rising volume, moving back above average, but quite light for an expiration session. 2700 is next resistance on up to 2750ish.
DJ30: Finally broke up into the October/December range, clearing the 50 day MA and 61% Fibonacci retracement as well. Next resistance is 25,000 where the 200 day SMA resides as well as a series of price points from October including a series of gaps. Important level.
Source: Investment House
It's all about "how much you made when you were right" & "how little you lost when you were wrong"