Everybody is bullish on the stock market, but are the bulls that strong? An in-depth look with the help of oscillators say no. This is a very annoying market, with daily swings that have no logic whatsoever. This is the fourth false breakout in 2014. This fact rules out the option of getting into a short right now and riding it to 15000 or even 14000. What I am going to do is wait for a daily strong sell signal, like another bearish divergence and a false breakout.
Analyzing the chart, there is a clear uptrend going on, and after a crazy rally, the Dow retraces to the EMA Wave. But where is that crazy rally in 2014?? The price deviation from its EMA is very shallow. The MACD lines continue to be in a massive double bearish divergence, first a class A, then a class B. This is toppy behaviour. The MACD histogram had a very nice run in the beginning of 2013, and a smaller run at the end of 2013. Where is the power of bulls right now? There is no clear downtick to confirm the divergence, but by the time there will be one, it is going to be too late to jump in, as this is a weekly chart, and we are still in an uptrend. The point is we need to anticipate. Think about it ; in order for the Dow (and it's the same picture as in Germany, Spain, Australia, France)
to clear this bearish divergence, it would have to rally to about 20000 ( this is just an aproximation, theres no way of telling). Now, how likely is the Dow to rally to 20000 till the end of the year or the start of 2015, compared to correcting to 14000 - 15000 in the next few months, and clearing up this ugly bearish divergence?
Now the Force Index. First the longer term FI, coloured in blue and circled in green. Look at that huge class B bearish divergence. Why would you buy this?? Yes sure, I may be wrong, and the Dow might rally 1000 points this week, but why would you buy this? The second FI, coloured in red, is used for entries and finding short term weakness or strength, that is how its creator, Dr. Elder uses it. The bearish divergence is going on for months, and Dr. Elder said once that what he really likes is 4 peaks on the 2 day FI, each one lower than the other with price standing higher at each peak. Here, the price is not standing higher, but we have 5 lower peaks on the FI. This is extremely bearish.
The daily chart stands at a buy zone, and on Friday the momentum from Thursday was lost. I don't want to enter right now, I want to go in a bit higher. I will wait for a serious signal, as I got whipsawed a few times by this false breakouts.
Analyzing the chart, there is a clear uptrend going on, and after a crazy rally, the Dow retraces to the EMA Wave. But where is that crazy rally in 2014?? The price deviation from its EMA is very shallow. The MACD lines continue to be in a massive double bearish divergence, first a class A, then a class B. This is toppy behaviour. The MACD histogram had a very nice run in the beginning of 2013, and a smaller run at the end of 2013. Where is the power of bulls right now? There is no clear downtick to confirm the divergence, but by the time there will be one, it is going to be too late to jump in, as this is a weekly chart, and we are still in an uptrend. The point is we need to anticipate. Think about it ; in order for the Dow (and it's the same picture as in Germany, Spain, Australia, France)
to clear this bearish divergence, it would have to rally to about 20000 ( this is just an aproximation, theres no way of telling). Now, how likely is the Dow to rally to 20000 till the end of the year or the start of 2015, compared to correcting to 14000 - 15000 in the next few months, and clearing up this ugly bearish divergence?
Now the Force Index. First the longer term FI, coloured in blue and circled in green. Look at that huge class B bearish divergence. Why would you buy this?? Yes sure, I may be wrong, and the Dow might rally 1000 points this week, but why would you buy this? The second FI, coloured in red, is used for entries and finding short term weakness or strength, that is how its creator, Dr. Elder uses it. The bearish divergence is going on for months, and Dr. Elder said once that what he really likes is 4 peaks on the 2 day FI, each one lower than the other with price standing higher at each peak. Here, the price is not standing higher, but we have 5 lower peaks on the FI. This is extremely bearish.
The daily chart stands at a buy zone, and on Friday the momentum from Thursday was lost. I don't want to enter right now, I want to go in a bit higher. I will wait for a serious signal, as I got whipsawed a few times by this false breakouts.
