SP500 index lost all gains from previous 5 weeks during last selloff . It is not bullish sign. Some correction is in front of us. Index can easily drop to 1000 pt level. It is time to be cautions and think also about short sell trades.
I have noticed that USD Index has broken downtrendline and finished last week stronger. I think we can see start of new USD bullish trend move . I am waiting for this new trend and plan to trade it in my fund accordingly.
This index can be traded directly with ETF stock “UUP”.
Stock market rally from last days is accompanied by very low volume levels. As you may know, volume is important indicator for me. And so I do not know now if stock market will make new breakout again.
I was not trading too much last week as this rally left me practically without open trades on stock market. I closed 2 longs and still I have opened one short (KR), but I am still in process of waiting for stock market pullback.
10 days of strong rally without pullback did not allowed me to enter trade with good risk reward ratio.
Yo can see declining volume since beginning of May on US stock markets. There are not real buyers on US stock markets since then.
I think that all move from beginning of May (near 930 high) is in risk. If we will not see some upmove with strong volume, then stock market can easily drop below 900 level – 800 to 820 as target.
Broad market index SP500 is trading in very tight range in last few days. And also volume totally collapsed.
SPX is pushed down by resistance level near 940 – 950 level . But there is also uptrend line supporting price in rise. Also 200SMA and 20MA are near current price level. I expect that we will see stronger move soon, up or down. Till breakout or breakdown I do not want to make a lot of aggressive trades.
My swing trading strategy has now prepared stock trade setup for relative strong or relative weak stocks only.
10Year Bond yield is now in resistance area between 3.90 – 4.20. It can rest there. But final resistance can be seen near 4.80 where is upper line of longterm downtrend channel.
Bonds can be traded by Bond ETF or Short ETF for Bonds
I was quite reluctant to buy long positions during last week rally. I would like to see more significant correction first.
Yesterday stock markets presented bearish signal. After very strong open with gap up they reversed their course and finished day on their lows. There was also strong volume too.
Below is example of Nasdaq chart. Nasdaq is leader of current rally and bearish reversal candlestick with strong volume signalize that we could see some correction. Correction which is much needed, I think.
What is your opinion ?
Based on requests from my readers and clients I am now preparing report with investment ideas I want to monitor and trade during Y2009.
These investment themes will be based on global macro strategies I have prepared. They can be traded on stock markets, FOREX or commodities markets. I trade them in my own fund. Most of them are good for position trades.
This report will be paid and will be available for limited number of readers only. I will send more details about it soon by email but if you want to reserve your copy in advance, you can also contact me.
I have noticed during my stock chart analysis that 10Y T-Note interest rate is moving in downtrend channel in last 10 years.
Based on simple principles of support and resistance I think that we can expect that this interest rate will drop near 2%. Support level could be between 2.0 to 2.25%.
