Sunday, November 14, 2010

Weekly Forecast - Nov. 14th

Well my weekly forecast on Nov. 7th called for an interesting week with some of the price action we were seeing, and I think we got just that.  The market saw a nice a nice pull back throughout the week finishing strong on Friday. 

Currently I am about 44% long with no shorts.  I haven't shorted the market because my brokerage is going through a lot of trouble especially with short selling and hard to borrow fees.  I am moving brokerages which should be completed around Thanksgiving.

Another week that will be light with economic reports.  Nothing abnormal will be coming out and I am sure the Fed will be around.

With the action we saw Friday should the bulls be worried? Let's see..

Today we start off with the S&P e-mini (/ES).  We can see now that we have a new resistance at 1225, and have now fallen back below April highs.  Unfortunately the /ES is now caught in "no-mans" land without a clear path on which way to go.  We have an upper resistance at 1208 and support at 1169.  Which direction we decide to head is unknown.

The S&P500 has now broke under the upward trendline starting back in August 2010.  The markets here could continue to fall until it finds support at 1182 in which we could see a bounce and retrace to the trendline.

The EUR/USD currency pair played out perfect by putting in a nice top and breaking below support.  We saw good resistance at the 1.4247 mark before starting our fall.  It still finds support on the 50 day moving average but a break of that will take it down to the fibonacci retracement at 1.3494.

After a nice cup and handle breakout we saw the pound/dollar pair find resistance at the fibonacci retracement.  After it met with the fibonacci level it quickly sold off and found support on its breakout level.  Any break of this level will quickly be met with more support from the 50 day moving average and upward trendline.

USD/JPY finally found a bottom and started its move upward.  As I said last week any move upward would be quickly met with a downward trendline, and we saw just that.  The last three days have been met with strong resistance from the trendline and the 50 day moving average.  We saw indecision on Friday when we put in a nice doji candle.  If the USD/JPY can't break through this resistance soon we will see another drop.

$SPX (hourly)
 One of the more interesting charts in this forcast and has been for a couple of weeks is the $SPX hourly chart.  Last week we broke resistance, saw a huge gain, and quickly found support in the upward trendline.  What is even more interesting is the textbook gap fill and bounce off of support.  Now we have cleanly broke below the trendline support and have already retraced a bit, so more selling could be seen here.  However we did have a nice bounce on support.  What we could see here is a topping pattern put in on the $SPX before a breakdown.

Here is the weekly $NYSI overlayed with slow stochastics overlayed.  This is basically a reversal indicator seeing a market reversal on upper and lower extremes.  Our last reversal was in the middle of the stochastics which is unusal but can happen.  This chart isn't 100% accurate and not pin-point accurate on time, but as you can see from the chart behind it is a great tool to have.  As you can see we are currently in a downtrend and should wait till we hit an extreme before reversing and adding longs
Another interesting week ahead of us, with no crystal clear direction in sight.  We have room to move up, down, and sideways.  In my best guess I see a move sideways as the bulls and bears continue to battle it out.  I would also venture another leg down before pushing higher.

If you choose to grab some longs here then I would suggest scaling into positions until a direction is set. 

Good luck in the upcoming week!

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