Trade, Live and Thrive: 06/10/12

Sunday, June 10, 2012

S&P 500 - Triple Screen 'Technical Analysis' - Week: 04 June to 08 June 01 2012 - Bulls bounce off Channel bottoms..

Learning from Last Week:

We identified and studied the confluence of channel bottom resistance on the EOD - which the Bulls used to stage a comeback (click).

The close of May, above the 1300 mark, suggested strength for the Bulls.

Reclaiming the Channel middle ground - where do the Bulls go now?

S&P 500: Long Term View (or) Month Chart (each candle is 1 month's price move) (or) EOM Chart:

S&P 500 - End of Month Chart (EOM) - 08 June, 2012.

Bulls removed the Bear's toe from inside this screen - moving the close above the Blue middle line.

Resistance is at the 5 EMA - life would be good for bulls above this level.

STS (above 80) told us last week that the Bulls were in a good place.

S&P 500: Medium Term View (or) Week Chart (each candle is 1 week's price move) (or) EOW Chart:

S&P 500 - End of Week Chart (EOW) - 08 June, 2012.

Bears gave up ownership of this screen with last week's bounce.

The touchdown to channel bottom looks perfect.

With a close above the 5 EMA, Bulls have a perfect take off point.

S&P 500: Short Term View (or) Day Chart (each candle is 1 day's price move) (or) EOD Chart:

S&P 500 - End of Day Chart (EOD) - 08 June, 2012.

'a' shows us the exact point where we identified the confluence of support last week.

'b' tells us that the index staying above the EOD middle line - would mean that the MVWAP 34 is targeted next.

All short term MAs that we track are crossed and look like crossing each other bullishly soon.

The MACD Histogram is ticking up nicely.

Looking froward into the next week:

The battle for the Middle ground, does not look like its over.

The scale tipping can be gauged, by the break of the 5 EMA on the EOW or the EOD channel middle.

Bulls would look at taking the MVWAP 34 on the EOD early next week.

Intra-week updates shall be up, to analyze that.

CNX Nifty 50 - Triple Screen 'Technical Analysis' - Week: 04 June to 08 June, 2012 - Bulls stampede to Channel top!

Learning from the Past weeks:

We called the end of Bear Times and start of consolidation 4 weeks ago (click).

We reiterated that the Nifty was consolidating couple of times after that (click) and (click).

The Nifty bounced of the extremes of our defined range - fairly accurately.

Then last week we suggested that a forceful move above the 34 EMA, would signal a Bullish breakout (click).

The Nifty spend the last two day above the 34 EMA, with the Bulls in charge of the Short Term.

Where are we now and where are we going to next?

Nifty 50: Long Term View (or) Month Chart, each candle is 1 month's price action (or) EOM Chart:

CNX Nifty 50 - End of Month (EOM) Chart - 08 June, 2012.

The Month candle changed color in one week.
The CCI indicator shows the trend of the month.
The confluence of the 5 EMA and 34 EMA is the current resistance.
Bulls need to break this resistance, to get back the advantage.

Nifty 50: Medium Term View (or) Week Chart, each candle is 1 week's price action (or) EOW Chart:

CNX Nifty 50 - End of Week (EOW) Chart - 08 June, 2012.

The STS Support Resistance line (red), accurately told us that the reversal was on..

Support for Bulls was at the 200 SMA - as suggested last week.

The Bearish Engulfing of last week was negated.

We now have a 'Bullish Engulfing' and its possible successor is the 'Three Outside up' to study.

Bullish Engulfing:
http://www.investopedia.com/terms/b/bullishengulfingpattern.asp#axzz1xOzjnvc7
http://www.onlinetradingconcepts.com/TechnicalAnalysis/Candlesticks/BulllishEngulfing.html
Three Outside Up:
http://thepatternsite.com/ThreeOutsideUp.html
http://www.candlestickanalysis.com/three-outside-up-candlestick-pattern

Nifty 50: Short Term View (or) Day Chart, each candle is 1 week's price action (or) EOD Chart:

CNX Nifty 50 - End of Day (EOD) Chart - 08 June, 2012.

Along with the 200 DMA on the EOW, the Fibonacci 61.8% on EOD, was suggested as Support for Bulls - in the last study.

Taking off from this Level, the Bulls cracked the 34 EMA and the 200 SMA to touch the 50 SMA.

The volume for this breakout, does not show the force one expected, as seen in the bars above.

The gap between the 200 SMA and 50 SMA, that we saw falling from 80 to 40 last week, is now lower at 20 points.

Channel top (red line) is achieved.

Looking forward into the next week:

Avoiding a bearish cross of the 50 and 200 SMA, would require the Nifty to keep moving up with the current rate of climb - tough ask.

The Bullish pattern on the EOW and the channel resistance on the EOD are what would define the action for the opposing camps next week.

Bulls are the flavor currently.

Intra-week updates shall be up.

Welcome Read

The Trading methods used here are suitable for those who (like me) are always Learners in the World Market (never presuming Mastery).

One learns with 'Technical Analysis' using Moving Averages, Channels, Time frames, Pattern & Candlestick Analysis, Fibonacci, Ichimoku Cloud, Oscillators & other Technical Indicators.

To comprehend the Dynamics of any Market, Peer Wisdom suggests, that we show plenty of Patience, keep it real Simple and adopt tons of Discipline.

We therefore use the same framework 'Patiently' every week - 'Simple' Technical Analysis Tools are repeated - The 'Discipline' of keeping a Neutral view is maintained.

So welcome to my notes - posted here for my Friends and Family.

Some Quotes..

There are times when playing the stock market that your money should be inactive - waiting on the sidelines in cash - waiting to come into play. In the stockmarket - time is not money - time is time and money is money. Often money that is just sitting can later be moved into the right situation at the right time and make a vast fortune – patience – patience. Patience is the key to success not speed.

Jesse Livermore.

That's been one of my mantras - focus and simplicity. Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it's worth it in the end because once you get there, you can move mountains.

Steve Jobs.

Discipline is the bridge between goals and accomplishment.

Jim Rohn.

Favorite Quote

"Why do we trade?

To be sure, trading allows us independence, the opportunity to work for ourselves. Trading also offers the prospects of a lifestyle in which evenings and weekends need not be consumed by work. Some of us crave the competitive aspect of trading, doing fresh battle each day. Others approach trading as a puzzle to be solved, deriving a sense of intellectual achievement. Finally, there is income. A successful trader can make seven figures in a year—and many of the traders I work with are living proof of that.

So why do they trade? Once you have the money, all of trading’s lifestyle advantages could easily be yours. Needs for competition and intellectual stimulation could be met in so many other ways. Why do traders remain traders long after they’ve won the game?

The great professions are those that serve as personal playing fields. They are the arenas we choose to express and develop ourselves. In mastering a discipline, we cultivate self-mastery. In writing a poem or placing a large trade, we capture—in a single act—our vision of how we see the world at that moment.

The great occupations are great precisely because they are such meaningful playing fields. Long after we’ve earned fame and fortune, the calling remains to be more than we are, to return to the arena and do battle with our limitations. The profound urge to extend the human grasp is common to all the great callings. To run faster, to capture more beauty, to predict ever better: in no small measure, our work is our pursuit of the godlike, however fleeting.

Maybe it is our different images of the godlike that animate our career choices.In work we find something divine within ourselves. Whether as scientists, monks, or traders, we strive for those moments when we are just a little closer to perfection, a little nearer to immortality. That is why we trade"

.... Brett N. Steenbarger

Inspiration

The Parable of Talents...

14 For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods. 15 And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey. 16 Then he that had received the five talents went and traded with the same, and made them other five talents. 17 And likewise he that had received two, he also gained other two. 18 But he that had received one went and digged in the earth, and hid his lord's money. 19 After a long time the lord of those servants cometh, and reckoneth with them. 20 And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more. 21 His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 22 He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them. 23 His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord. 24 Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed: 25 And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine. 26 His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed: 27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury. 28 Take therefore the talent from him, and give it unto him which hath ten talents. 29 For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath. 30 And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

The Holy Bible: Matthew - Chapter 25.