Insight: ECB thinks the unthinkable, action likely weeks away

A MUST READ ARTICLE ABOUT ECB'S OPTIONS


http://www.reuters.com/article/2012/07/30/us-ecb-options-idUSBRE86T0OC20120730

All indexes making small movements up and down around last Fridays closes. All big trendlines are up, 2 hr up or sideways. Very calm at present.

Euro zone crisis heads for September crunch

http://www.reuters.com/article/2012/07/29/us-eurozone-crisis-idUSBRE86S05J20120729?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

DOW closed up Friday at 13.075.7, a 13 week high opening the way to test 2012 high at 13.337.5.

First picture is DOW 22 weeks which will get a cross on upside Monday with both MA's up. Second picture is the weekly chart from the all time high 2007 until now. Please click for bigger picture.

When Europe closed, DOW was at 12.984. After two hours on Wall Street the high came at 13.117.5 and the last hours there was a sideways trend before the close at 13.075.7. It is too early to draw any long term conclusions of this close. Next Tuesday we have the monthly close and I want to follow the markets a couple of days before making a long term forecast. However right now the monthly, weekly, daily and 2 hour trends are up and next target technically could be the 2012 high at 13.337.5 but this last jump could also be a bull trap. If the DOW should continue up there is a very strong resistance from the weekly closing double top at 13.233.5

DAX have just closed the old gap. Today's lower gap is at 6.592.39

DAX has opened with a gap on upside in a move to close earlier gap at 6.623.75. FTSE got a gap at 5.643.25. These two gaps are the only one's which have not been closed. Worst case scenario today could be further uptrend to close these gaps before US news and if they news are bad a sharp fall could follow.

WATCH UP FOR US NEWS 14:30 AND 15:55. Wary consumers to weigh on growth in second quarter

WATCH UP FOR US NEWS ABOUT SECOND QUARTER GDP NUMBERS AT 14:30 CET AND CONFIDENCE AT 15.55

http://www.reuters.com/article/2012/07/27/us-usa-economy-idUSBRE86Q04820120727?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Feedfetcher

DOW closed up Thursday at 12.884.5 with an intraday high of 12.931.7.

Asia has been trading sideways with a high so far at 12.916. The 2 hr trend is up and resistance is at  12.931.7, 12.940.9 and the weekly high at 12.989. Europe will open in little more than two hours.

This week has been very volatile with big swings. DOW is the strongest of all main indexes and most likely to test the weekly high. SP500 and SWED have closed their gaps but DAX need to go higher for closing its gap. FTSE seems to have very strong resistance from the falling 21 week MA. A very interesting day again with a very complicated technical picture. The close tonight on Wall Street will be of big importance for the weekly sideways trend. The markets are reacting very strongly on all news and I think the big players are trading the DOW so anything can happen before Friday close.

The EURO's daily and weekly trends are still down but is attacking very strong resistance for the second week so far without success. 

DOW starts a powerful rally driving the short trends on upside

All the main indexes indicate that they will get a downtrend for the rest of the day. There is important news in US at CET 14.30 that can change my prediction

Shocking’ Dip in Britain’s Output Reflects European Stress

http://www.nytimes.com/2012/07/26/business/global/signs-of-deepening-downturn-multiply-in-europe.html?partner=rss&emc=rss

NAS weekly 22 weeks until now.

Here are the 22 weekly bars I follow for the other main indexes. You see the falling 21 week MA and the rising 8 week MA. The question is will this sideways trend break on downside or upside. Will there be a cross of the MA:s or will the 8 week MA give up and turn down before it hits the 21 MA. As it stands right now the 8 MA will turn down already next Monday. If you count 8 bars back from the right, not including the current last bar you will see the close below the current dotted price line. That close is what keeps the 8 MA rising. But if we assume that this will be the close on Friday the 8 MA will turn down on Monday because the price line will the be below the new 8 bar's close. You also see the closes from 8 bars back until now are rising which means the trend will start falling. As we go along you will learn this most important rule I invented 1984.

NAS100.I the tech heavy index in the US has since 2009 lived its own life in a very strong bull market which now has reached its peak after five monthly waves. See picture below. The last 3 months it looks like DOW and SP500 so I am now adding it to my main indexes to see where the stock markets are going.

Here is the monthly trend since 2002. The real strong bull market started in 2009 and I think we have seen the top in March 2012 at 2.754. There is still a technical possibility that the top can be taken but the weekly trend is what is interesting right now in next blog you will see why.

DOW closed 12.679 Wednesday. Asia has moved the index sideways, now at 12.697, 15 min before Europe opens. the 2 hour trend is up to sideways, and the important R-point is 12.746. No clear indication where the trend will go so far.

DOW 10 min before Europe opens moving slowly with 2 hr trend still down in 12 560 area. Can not tell how the break will go at present.

Italy's SPMIB.I took a new intraday low since 2009 at 12.282 Tuesday.

DOW took a new low at 12.520 late Tuesday but then rallied to close at 12.615. Asia opened down at 12.543 but is now at CET 05.30 trying upside at 12.575. 2 hr trend is still down.

The DOW is still very volatile. The technical picture give different short term predictions. 

Europe is sleepwalking towards imminent disaster, warn top economists

http://www.telegraph.co.uk/finance/financialcrisis/9424793/Europe-is-sleepwalking-towards-imminent-disaster-warn-top-economists.html

DOW, SP500, FTSE and DAX have broken on downside and taken out yesterdays lows. IBEX has taken a new 10 year low at 5.899.7. All 2 hr trends are down.

DOW's sideways trend currently looks to break on downside to test yesterday's low 2 hr close at 1.598.9. But I am not absolutely sure. US will show after opening in 30 minutes.

DAX weekly from April 2011 until now July 24, 2012

This week only one full day has been traded so the last bar shows how it went from the falling 21 week MA to the rising 8 week MA. Kept within that range. The dotted line is where it is traded now. There is a strong falling MA and a strong rising MA. Will there be a cross or not. This is the strongest European index. This week has only started and I think there can be more volatility.

DOW closed Monday after a strong rally at 12.719.3. Asia started to sell down the index but did not manage. Now 30 minutes before Europe opens trading is at 12.703. The 2 hr, 8 MA has turned up but the 21 MA is falling. This means we are at a breaking point today for up or down movement.

DOW and SP500 are now trading below last week's low.

SP500 new low at 1.342.71. Support at 1.335.23 and finally 1.324.72

FTSE taking new low at 5.538. Support lies at 5.514.57, 5.489.57 and finally 5.437.75

DOW takes new low at 12.658 closing in on last support at 12.641.5. A break here could open the way to 12.604.5 and weekly important 12.554. Final target could the be 12.489.7

DOW and SP500 takes new lows at 12.709.8 and 1.350.71

SANTANDER, Spains biggest bank, very close to very important last support for many years at 3.940, Now trading 4.050

All indexes are down probably on Asia, IBEX close to 2012 low which is at 5.989.4. Currently trading 6.077.

DOW is taken new low at 12.723.8. Possible S point 12.698

FTSE just taken out last support and is now in very dangerous downtrend. Next support at 5.548.

FTSE opened with a big gap on downside and is currently testing last support close in 2 hr chart at 5.597.89. 2 hr trend is down.

DAX opened with a big gap on downside at a low of 6.524. 2 hr trend is now down. Currently trading at 6.564

DOW and EURO falling 15 minutes before Europe opens

DOW has just taken out important S point at 12.740.2. Now trading 12.735. Next support is at 12.641.4. The 2 hr trend is sharply down. Restest of S point very likely.

EURO open Monday with a gap on downside. Now trading 1.2093. The 2010 low is at 1.1875 and is next weekly support. All trend lines are down.

Asian indexes falls sharply on opening Monday. Hang Seng (HSI) and Nikkei worst off. Dragging DOW and SP500 down.

DOW 22 week close Friday July 20.

The DOW could not hold or make a new weekly high this week. It fell to close below the falling 21 week MA keeping my technical forecast picture alive. On Monday there will be a new bar and the 8 MA will get its steepest upside movement since the number 8 bar from the right will have its lowest close. It will not be enough for a cross of the slightly down moving 21 MA. The intraweek's double top at 12.989 could be tested again week July 23. But if the high holds during next week the coming 2 weeks will slow the 8 MA's rise down considerable. I expect a very interesting trading week from next Monday. 

Now it is time to prepare for a possible EURO drop that will make the stock markets fall

The EURO took a new 2 year low Friday and the monthly chart gives a severe warning for the coming weeks and months. A monthly close below the horizontal line at 1.1787 could technically send the Euro down to 0.9000 area which would trigger a collapse of all markets. It is not time yet and this drop could be stopped but since this is the most important factor in the world economy in my view I would like you to keep this picture in mind. The real reason why the stock markets fell Friday afternoon was the Euro, nothing else in my opinion.

DOW and SP500 2 hr trend is now down

8 and 21 MA are down on the 2 hr chart. That means the 2 hr trend is down. Now trading 12.869. Resistance that could be revisited is 12.898 and support is currently the rising 34 MA now at 12.866. The low has been 12.855.

DOW did not take a clear weekly high in the sideways trend Thursday

DOW intraday was just a few points above but closed down at 12.940.9. Asia has taken the Dow further down, now trading 12.900. The 2 hr 8 MA is down but the 21 MA is up which give a technical possibility to make a new test of the high later today. Most likely however is that Thursdays top will hold.

All other main indexes has followed DOW and I will review the markets before US opens today.

DOW in a very interesting situation now.

The 2 hr top July 4 was 12.982.4. Weekly high in the weekly sideways trend. Today's top was 12.989.5. Now reading 12.972.A new high can have important implications.
US important news to follow:
CET 14.30 US Jobless claims
CET 16.00 Philadelphia FED numbers and Leading indicators

DOW closed up at 12.901.4 Wednesday. Asia opened with a gap on upside.

Asia high has been 12.959. Now trading sideways at 12.955. The important resistance point for Dow is 12.982.4 to keep the sideways weekly trend. 2 hour trend is still up and a test of the R point can com later today.
SP500 and Nasdaq look exactly the same.

DAX is the strongest European index with the 2 hour trend up. Just opened with a small gap on upside at 6.707.22. Next R-point is 6.877.05. 

DOW weekly line chart from March 2009 bottom until now.

To give you a perspective of DOW weekly here is the chart from March 2009 when this uptrend started. There are 5 big waves up to the top. Then a correction down and then you see the movement on the chart below with 8 and 21 week MA's. Our question is. Will this sideways trend break on upside or on downside. I think that it will break on downside latest in October but it could happen from mid August. This is my spontaneous reflection when I look at this chart. I do not believe in a new all time high getting above the 2007 top because the world economy is not expanding. I do not believe in a rising trend unless there are evidence that the economy get DEMAND. We have supply and capacity but demand is falling, not increasing all over the world. The interest rates cannot get lower so what FED and ECB does will not help. Austerity and saving decreases demand. What the US presidents did during the 1930's did not help at all. We are doing the same thing now. Then demand started first when World War II came. 

DOW still holding within the weekly range in sideways trend

The last bar is the DOW's movement this week so far. Holding steady between the falling 21 week MA and the rising 8 MA. The fifth weekly sideways bar. To buy stocks the last five weeks has been meaningless for investment. The only reason to participate in the market is for so called day traders. Investors should keep staying away. This is why I do not report all small movements several times a day, because it is meaningless at present. It is summer and thin trade. Now and then rallies or drops occur when the big players intervene for a couple of hours. The trading pattern short term is close to impossible to predict. Nor are there any big news. Currently the quarterly company reports are flooding in but good results take out bad results. USA, Europe and Asia long trends look the same. They are flat. This can go on for a few more weeks until we come closer to a cross by the MA's.

Gold, Silver, Oil and Bonds are also sideways so my advice is still to stay in cash and wait. The EURO's trend is still down but the last two weeks it seems to get more and more difficult to push it lower because focus is turning slowly to the U.S. and the locked political situation that must be solved soon about the taxes.

Unless something important happens for the markets outlook there will be short daily comments from me as it has been for some time now.

After a very dull session Monday the DOW with small movements closed down at 12.723. In Asia this morning DOW is trading on upside with the 2 hour trend up to yesterdays top now at 12.776. How this up trend will continue we just have to watch.

DOW is still moving sideways. 2 hr did not sufficiently turn down at 10 but I think it should at 14.00.

The DOW is still working sideways with the rising 2 hr chart but it looks right now that the 8 MA will turn down at CET 10.00. Europe opens in 30 minutes and can change this forecast.

DAX 22 weeks with 8 and 21 weeks MA's

DAX the same chart as FTSE, SP500 and DOW below. The big picture looks the same for all these indexes. When they move in tandem I use to follow carefully only one, for now it is the DOW since it is traded  the longest time per day. All these indexes will move the same way when the new trend starts. You see that DAX has a very big gap between the MA's and a cross will take time to get. 

FTSE weekly 22 weeks to compare with SP500 and DOW

Look at the first bar in the chart and you will see how high the FTSE must go to change the falling 21 week MA. You also see the very low 8 and 7 closes from the right to see the steep uptrend for the 8 MA. FTSE has the last two weeks closed above the 21 MA but that does not matter. I want to see a cross of the MA's. FTSE will not get very much higher without a cross first so it is in the same situation as SP500 and DOW. There are of course very much more to look at than the MA's behavior. Here for instance we have a weekly double close which gives a first warning of a possible downside move.

SP500 weekly chart 22 weeks to compare with the DOW below

Since you now know how to interpret the 8 and 21 MA's here is the SP500 the same chart as the DOW below. It looks more or less the same and will always react the same as the DOW. But you also see the small differences. The 8 MA for instance is not as steep upward as the Dow's 8 MA. 

DOW weekly chart now

Here you can now see the small bar for this week between the falling 21 week MA and rising 8 week MA. DOW must get above the first bar's close on the chart to lift the 21 MA. The 8 week MA is up and will only turn down if the index gets below the 8 bar's close from the right (do not count the current bar). So there is no cross this week. But observe the 7 bar from the right which has a very low close which will raise the 8 MA next week steeper, but I do not think it will come to a cross then either. Here you can see for your self how the 8 and 21 MA will perform the coming weeks depending on different weekly closes. This weeks bar shows we are trading sideways so far for the sixth week.

DOW closed Friday near the rally top at 12.771. It is now trading down in Asia currently at 12.742. The 2 hour trend still gives support but I think that the falling daily trend now at 12.717 will force the DOW down later today. Europe will open in 2 hours.

DOW rally at CET 15.30

The 2 hr trend have been rising and a rally up to the falling 8 day MA at 12.740.5 was not unexpected and was likely caused by an intervention in the thin market by the big traders since all the big news have been bad in the US especially the confidence index. But interventions do not always follow the technical rules so the trend might go even higher. Currently the Dow is trading at 12.724.

DOW closed Thursday at 12.575 after an intraday low of 12.489.7. Now trading 12.598. The daily trend is down and the 2 hour trend is up but could easily change to down. Small movements just before Europe opens

DOW weekly 22 weeks with 8 and 21 MA today Friday July 13, CET 07.33

Today is the last trading day for the last bar. Click to make bigger. I would like you to understand this because it will help you a lot for the future. But it is difficult to teach. One bar is one weeks trading. At the top of this weeks bar you see the green 21 week MA holding down the top. On every bar you see the closing sign to the right. If you add 21  closing points from the left you will get a number.( Observe the current week is not included - there are 22 bars on the chart) Divide that number with 21 and you will get the exact place where the 21 MA is now over the current bar. If you look at the first bars close and see that it is higher than the current trading point you know that the 21 MA is down. If a rally should start and go above the first bars close the 21 MA will go up. That means you see the 21 trend by comparing the 22 close with current price always. Next Monday we will have a new bar and then the second bars close should be compared to the trading line. You see that the next 6 closes from the left get higher and higher pushing the 21 MA lower and lower by the week if trading is below the closes.

So the 21 MA keeps the trend down. Now the 8 MA function exactly the same. If you understand what I mean your knowledge has skyrocket in technical analyzing. This is my own invention from 1984. You look at the eight bar back from the current ( do not include the current bar) and you see that the close is below current trading which means that the 8 MA is up. The coming 2 weeks will be the same. This means that the 8 MA will rise and the 21 MA will fall. The trend will move between these two MA's until a cross occurs or the 8 MA turns down before a cross. A cross means bull market and and no cross bear market.

All MA's functions the same way. From 1 minute chart to yearly charts. Give it a try.

DOW closed Wednesday at 12.602.7. The daily and 2 hour trends are down. First target is 12.531.6. Now trading 12.546

DOW traded the whole range in the weekly chart during Tuesday.

DOW hit the weekly falling 21 MA at 12.828 Tuesday and then fell to just above the rising 8 week MA at 12.605 before closing at 12.651. This move happened to be exactly what I wrote about in yesterdays blog.

The falling 21 week MA is now tested and protected for at least the next five days since this morning the daily 8 MA also turned down to 12.802 which now is the main resistance point for any rally. I expect further test on downside today with 12.603 as main support. Trading in Asia has reached a low of 12.620 and the Dow is now trading at 12.641.

SWED use to show the way for all big trend changes.This chart is weekly with only closes to explain more about the theory in the blogs below.

The black dots are the weekly closing points during 56 weeks. Here you see the rising 8 MA and the falling 21 MA. For 5 weeks the 8 MA will likely rise and for 7 weeks the 21 MA will probably fall. Until the MA's cross or the 8 MA turns down before cross the closing points will most likely come in between these MA's. Before that happens we can see if a cross will come or not. If the 8 MA turns down after a few weeks without first crossing the 21 MA there will be a very strong fall and a long down trend. This is one example of how I use to see the next big move in advance but often together with other indicators. 

The theory below use to work but it could fail. If so I will tell you in this blog

The big pictures of DOW, DAX, FTSE and SP500 in this order from above to down. Weekly charts 56 weeks. They all look the same regarding the rising blue 8 week MA and the falling 21 week MA with this weeks trading, the last small bar, between the MA's. These pictures tells me that the 8 MA will continue up for at least 3 weeks and the 21 weeks MA's might continue down for at least 10 weeks. The big question is if the 8 MA will cross the 21 MA on upside (bull market)or turn down before crossing ( bear market ). Every Monday morning these MA's will come closer to each other. At one point before they meet we will see what will happen next. Until then the trading might go above or below these MA:s but it will come back between them again, as long as the 21 MA is down. This will take several weeks but is one way I use to see where the next big trend will go and when. Again, it is important that the 21 MA at every moment is down.

German president tells Angela Merkel to come clean on EU debt deal

I really recommend this article which shows what is going on within Germany and how the euro problem can escalate very quickly.

http://www.telegraph.co.uk/finance/financialcrisis/9385231/German-president-tells-Angela-Merkel-to-come-clean-on-EU-debt-deal.html

DOW fell 180 points last Friday on bad unemployment numbers to a low of 12.071. The last few hours a rally started and DOW closed at 12.770. In Asia today the market has been trading around that close.

The 2 hour downtrend is still in place and a retest of the low at 12.071 is possible. However today all traders should be back at their desks in the US and the technical picture does not give a clear indication where the short trend will go. The monthly trend is up, the weekly trend is mixed and the daily trend is up. This week could be very choppy without a clear trend the first two days.

DOW first S area is around 12.763. Second support is at 12.718.5. However the index can also turn upwards to test earlier support points from below.

DOW has broken the top formation's last support point at 12.793 and can fall sharply from there

The main indexes are moving sideways and the 2 hour trends have turned down. The daily trends are still up.

At CET 06.30 the 2 hour trends are down. Here are the crucial support points that must hold to avoid a steeper fall. Dow 12.850, SP500 1.362.23, FTSE 5.661.75 and DAX 6.474.17.

The daily trends are up and the 8 day MA is another S factor. It seems to me that the top formation is complete or nearly complete. The most important news which can send the indexes to new highs or lows are the US unemployment figures at CET 14.30. New non farm payrolls are expected for June to 93.000 compared to May 69.000. Unemployment rate expected to be unchanged at 8,2 %.

EURO has broken support point at 1.2442 and hit a new 5 week low at 1.2363. Now trading 1.2384. EURSEK has taken a new 12 year low at 8.5980.

The EURO has taken a new weekly low at 1.25045. R point at 1.2442

Just before European opening 2 hour trends are still up to sideways. Now just following the markets since there are signs of topping out.

All main indexes took new highs Tuesday and the 2 hour trends are up.

US is closed today on Independence Day but so far the CFD indexes ( Contract for difference) are open as usual.  Many US traders have taken the whole week off so the turnover is not very big. This also means that the rising trend could be vulnerable later. However the daily trends are up and strong and the 2 hour trends are up as well.
The long monthly term trends are sideways in Europe but up in the US. The weekly trends are mixed.

So this is the background, some people call it a summer rally.

US risks tepid recovery turning into recession, IMF warns

http://www.telegraph.co.uk/finance/economics/9373240/US-risks-tepid-recovery-turning-into-recession-IMF-warns.html

The daily trends are still up for all main indexes

The daily uptrend's are still in place but there are lots of resistance points just above current trading tops. It is very difficult at present to forecast the hourly trends. Second quarters's result will soon start coming and summer vacations have started in many countries in Europe.

Awaiting signs of a more clear picture.

US 10 year notes, Nymex light sweet crude and gold since 2008

FTSE and DAX weekly charts showing that the DOW is far ahead and that the European indexes have less strength

DOW June 30 2012. Charts: Monthly, Weekly and Daily charts in that order from the top.

The Monthly chart above shows that the monthly trend is up. The 8 and 21 MA's are up. For a monthly trend to get bearish the 8 MA must turn down. Now the target seems to be a test  of the double top high at 13.210.