Short-term bullish rebound bars

While the image below does not represent a change in sentiment on my part it does accurately reflect the Top Stories headline Stocks Snap Losing Streak and clearly shows that the market has bounced off of its recent lows while still maintaining a short and intermediate term bearish bias. Short term bias would change to bullish above 104.68 and intermediate term bias becomes bullish at 105.25. Click on image to enlarge.

Looking at FXI (the iShares FTSE/Xinhua China 25 Index) with a similar chart layout shows it is close to a short-term breakout to the upside. I watch this one closely as it has proven to be a leader on breakouts and breakdowns. Which way it goes from here we will just have to wait and see. Click on chart to enlarge.

Market Summary

As can be seen in the image below the pink background to the series of charts in the image is moving to the left. Now the hourly, 240 minute, and daily chart have the pink background color that indicates a downtrend. If the daily trend continues to the downside the pink background will move to the left on the daily chart and eventually the weekly chart will get a pink background as well. The image represents a spectrum going from long term to short term and the background color represents the trend. We are short term going down with the beginning of the intermediate term also going down. I have placed a sentiment meter on my blog here called My Current Sentiment. It will be updated when the trend changes. Click on image to enlarge.

Only the commodity indexes of Gasoline, Gold, and Oil were up for the week. I have added the FXI index to allow following China. Click on table to enlarge.

Market Summary

In the image below I consider the Weekly chart the long term view, the Daily chart the intermediate view and the 240 and 60 minute charts the short term view. Not a good week in the market last week. We are in the red on the short term but green on the long term and just barely green on the intermediate. We are about to roll over on the intermediate term. Is this just a small pull back or the beginning of a larger correction is the question. We will have to wait and see. Click on image to enlarge.

The clear winner in these markets year-to-date is the EEM emerging market etf up 45 percent. As it has been leading to the upside keep an eye on this one to see if it leads to the downside. Click on table to enlarge.

Market Timing

Markets overshoot to both the upside and the downside but the trend is the best indicator we have as to where the market is going. The image below shows the trend in the background color of each of the four charts for four time frames: Weekly, Daily, 240 minutes, and 60 minutes. Having all these time frames together in one image helps show and break down the turning of the market from going up to going down and in what time frame. A corrective trend is occurring within a larger bull market if we focus on the two charts on the right side of the image, the 240 minute and 60 minute time frame, with the pink background color. Click on image to enlarge.

Will Gold breakout?

The chart below is a 2 year daily price chart of $GOLD showing a massive base formation and a chart pattern that looks like a massive inverted head-and-shoulders formation. $GOLD is coming up to its 2009 high which is also the neckline resistance at the $1007.00 area. Should $GOLD go above this area it is very bullish for $GOLD but a bad sign for our nation and our economy. While gold has been said to be a hedge against inflation its true value may be as a hedge against geopolitical uncertainty. Should the stock market roll over and head south for any length of time I think that would increase the fear level which also correlates with rising gold prices. We will have to keep an eye on this one. Click on chart to enlarge.

5th Wave Top

5th-Wave top in the XLF shown here. Many other indices showing a 5th-Wave pattern.

Market Summary

The chart below is a 6 month daily chart of the S&P 500 with an indicator I developed called MovingAverageStopBC which is set with the SMA 20 as the stop point which changes the background color of the chart. While we are in an uptrend according to the light green background color of the chart the market has been going sideways for the last several days. This type of chart pattern is called a high base formation which is a bullish chart pattern. However, the last several high base chart patterns have failed to produce breakouts. Click on chart to enlarge.

Forign markets can give us an indication of the global economy of which we are a part and the Chinese market has been leading to the upside in the current rally. The Chinese market has been in a correction since the beginning of August and closed on Friday on the 50 day moving average. If that market goes below the 50 day moving average that could be a bad sign for our market. We are heading into the seasonally weak time of the market in September so a correction in our market is a possibility. We will just have to wait and see.