This is the problem with the Eurozon right now.

After Germany's decision to increase the European fund with more money the rest of the 17 members are likely to do the same before the middle of October.

It seems like Greece will default which is manageable. But now it is the much bigger problem with Italy and Spain the next thing to be worried about. These countries pay higher and higher yield every week for for their new bonds and this years turnover only for Italy is 420 billion euros.

With the new bigger fund this problem is not solved at all. The new money must pay the banks for their losses to Greece and he amount to help Italy and Spain is far from enough.

I recommend this article from Reuters this morning. http://www.reuters.com/article/2011/09/29/us-eurozone-idUSTRE78Q1BQ20110929

Spain's Prime minister has left the ship, ECB boss will very soon leave for an Italian man. I cannot see any solution  and it must be dealt with now. I see the possibility of bank-runs coming closer by the day.

Dow rose to 11.020. Tomorrow. is the last day of the month and you will get forecast for the coming week before Monday morning.

DAX surprised the market this morning  to start on upside and buyers willingly bought before the voting in Parliament  which was expected to give a positive outcome. Buy on the rumor and sell on the result.
Anyway the DAX have a gap at 5404 which I expect to be covered quite soon. Today's top was 5705 and the close came in at 5629.

The technical picture of DAX is a  very good for a start of an uptrend since the 8 week MA is poised to turn up  within two weeks unless something else suddenly happens. The DAX has fallen in five waves and it seems to have created a good basis for an uptrend. This is the last trading day for the month and I will have analysed the close of the month when I write the next blog during the weekend.

I am still looking for 5404 area for a buy if the tendency I see is correct.

Happy October

Indexes continued short term trend down on Wednesday. Germany votes about Greece today. Merkel will leave office if no.

DOW fell 180 points to close at 11.011.  If German parliament says NO today Thursday about more money to Europe the market is expected to fall much after vote. Time for vote unknown right now.

DAX still most interesting index. I expect DAX to fall down to 5363 starting at open . Here I want to buy DAX. If a yes comes I expect a powerful rally.

Dow might be bought at 11.056 or  10.862 all with following just the trend. My personal guess is a YES so it is important to follow the voting. If NO Angels Merkel has said she wants a vote about herself as Prime minister, which she is expected to loose.

A NO vote would be catastrophic for the trend.

US and Europe moves up Tuesday, but one hour before close steep fall occurs in all indexes.

Dow's up trend which went on until CET 21:30 topped at 11.369 and fell the last hour to close at 11.190 which is below the rising 2 hour trend's 8 MA telling me that the up trend's top might have been seen just below a very strong resistance point. Not until this 8 MA (8 closes in a row divided by eight added every second hour) turns down will the trend be in danger.
FTSE and DAX did exactly as the Dow and closed down. DAX managed to close a two week old gap before falling. CAC,MIB and IBEX also closed their gaps. CAC which is the only one in this group which is being traded in the US until its close, performed exactly as DOW, FTSE and DAX. All indexes in Europe use to follow Dow exactly and it seems like the last five weeks when they have diverted is over and we are back to normal again. Dow says it all.

SWED has its gap at 929.05 which might be closed at open Wednesday. The daily chart for SWED does not point to a real uptrend yet because the MA:s are wrongly placed. A jump and then it might be over for this time.

What Asia do between 02:00 and 08:00 is difficult to predict, they can only trade the US indexes but the result may spill over to Europe which opens 09:00. My best guess is that the trend will change while Europe is open that is before 17:30.

Tomorrow is the first interesting Parliament voting taking place and that is in Finland which wanted a collateral to vote yes. This result if negative will send the market down rapidly. Germany votes Thursday and Friday.

Wednesday - Friday will probably be very choppy. If the 2 hour trend moves down I will sell Dow or Germany just before it starts falling.

Dow took a strong jump last hours closing up 272 point at 11.043.

After subdued trading in Asia and Europe the Dow started to move up after Europe had closed. A 2 hour uptrend started and the index accelerated to close at 11.043. Next target is 11.115 where a gap should be closed, here after 11.173. If Dow takes that, 11.500 might come under test.
SP500, FTSE and DAX followed Dow and all closed up with strong 2 hour up trends. SWED closed up and will advance more at opening on Tuesday. This index is not traded in the US.

Dow can ofcourse stop its uptrend at any point but for now it seems strong.

The meeting of IMF, Worldbank and high economic dignitaries in US during the weekend most certainly gave the markets enough power to stop selling and choose the upside. Of all the talk about Greece and how Europe should leverage its fund to lend more, nothing changed the fundamental situation that Greece could be handled, but Italy and Spain could be next. That is the real problem. Spains Prime minister closed the Parliament today before new elections November 20. My personal wonder is what is hidden in Spains economy since the current Prime minister does not want a third term. So much has been said about Italy but close to nothing about Spain despite they pay the same high yield on bonds and Spains unemployment is more than 20 percent. Zapatero is definitely the man who is to blame for many bad political things during the last 8 years so I would not be surprised when Partido Popular takes over that they will find some thing that we do not know of yet.

Dow and SWED above critical point but not safe yet

US cash market have just opened and started with a rally on upside. Future market Dow has made a three wave upside move to above critical 10.830.20. Swed has a strong one hour trend on upside in place. The likely hood is that the low will hold at least today.

German DAX looks very interesting now moving sideways and small risk for a downside move. Keeping an eye on it because if a broad uptrend starts, this is probably the index to buy but not yet.

DOW IN EXTREMELY IMPORTANT SITUATION RIGHT NOW DECIDING FURTHER BIG FALL OR NOT.

When a trend goes below a very important resistance point a second test will occur from below of that point.

SWED broke the last support point at 862,98 last Friday and took a new yearly low at 836. The index then turned up to test the broken support point and closed exactly at 862,98 for the week. Monday will show if this point still is the last support point or not.

Much bigger impact has the Dow in the same situation. During Friday the index fell below extremely important supportpoint 10.830,20 down to 10.650. From here a quick rally up to test 10.830 from below. The index could only reach 10.827,7. New drop to 10.591 and then a second rally which only reached 10.790,5. Two hours later the index closed for the week at 10.765,1. The last supportpoint for the DOW is 10.517 before a new 2 hour close low for the year.

On these small points hinge the whole worlds stock markets on Monday. Will the 2 hour close get above 10.830,20 and stay there - that is the only question I am interested in right now. If not the road to 10.000  might open for the DOW unless the last support 10.517 can hold.

SWED30.I break down to a new yearly low now.Sweden use to show the way.

SWED30.I reached its peak May 11 at 1.174. Just a short while ago the index cleared last resistance at 851 and is now at 836 in the 2 hour close chart. SWED30.I was the index who led the way during 2007 - 2009. Awating the close at CET 14:00 for confirmation.

Asia and Europe starts uptrend but there is a "but" !

Writing this before CET 12:00.

Thursday 30 minutes before close Dow started a strong rally lifting the index by 175 points. The rally must have been a profit taking by the players with short positions - they sold earlier in the week and now decided to buy back their short positions. This powerful uptrend spilled over to Asia  which lifted the index to 10.813. This is also a trial to take back the lost resistance at 10.801 on close tonight. Asia lifted the index to the 2 hour close CET 04:00 at 828 which have been the top so far. The trend has then turned down to close at 10.744 at noon in Europe. - Now here comes my point. The 7 week sideways trend looks like a big Head and Shoulder formation with the neckline currently at 10.847. To get above a broken neckline again happens rarely. Other analysts may say that this is not a H&S but I think it is. If I am correct the Dow will fall to a target of 10.000 at present and SP500 and FTSE will follow. If I am wrong that will be shown today. Right now Dow seems to go down to test yesterdays low at 10.650. If that is beeing broken on downside the trend will take us down 800 points but this can take some time. It is also posible that Dow will hover around 10.650 - 10.847 for a while.

If something of interest happens today I will write a small blogg.

Happy week end.

Dow fell 391 points Tuesday to close at 10.734. Friday crucial for all markets.

Dow, SP500 and FTSE are now very close to take  new lows and hereby start the next sharp drop.
A Friday US close below 10.517 for the Dow, 1.087 for SP500 and 4.888 for FTSE will trigger a very strong risk for another drop down to below 10.000 for the Dow or 8 percent from current level.

Wednesday Dow fell 284 points triggering Asia and Europe to sell US stocks so the Dow opened with a gap Thursday which caused panic selling with a result of a 391 point drop. The big question is how Asia and Europe will perform Friday. A new gap on downside could push Dow to close down 218 points which is one point below the lowest close. To get an effect I guess that we need at least 280 points.

The second alternative is that 10.517 will hold Friday. The players who still are short Dow will take their profits and square the positions before the weekend.

All indexes are moving as Dow right now which make tracking easier.

During the weekend I will publish the outlook for next week.

CET 20:00 new lows on 2 hour charts, here the close.

Dow         10.650
SP500        1.118
FTSE         4.997

Now only the lows left. If broken a sharper fall can occur.

Close CET 18:00 of 2 hour charts.

Dow       10.723
SP500      1.128
FTSE       5.027

Bottom can ready tonight in US and up tomorrow.

Here are two hour close for the main inxes CET 16:00

Dow            10.751
SP500           1.127
FTSE            5.016

All technical targets are reached by now. Question is what the markets do now to next close at 18:00.

Dow, SP500 and FTSE close to important resistance.

Indexes have continued to slide and Dow, SP500 and FTSE are close to the technical bottoms. US just opened and now we will see the result of the cash market for the American indexes. Here are the earlier bottoms which are expected to hold on the 2 hour close.

Dow 10.801 10.661 10.518 New Low

SP500 1.122 1.112 1.087 New Low

FTSE 4.951 4.888 New Low

Stockmarkets slump on Fed news CET 20:15, Dow drops 284 points.

All indexes held up fine until Fed released its monetary-policy statement. All important resistance points were broken abruptely ending my view earlier that a break on upside might come. No positions were taken because the five minutes trend showed the drop well in advance. Dow closed at 11.125. Quick projection points to the 10.950-area for the bottom of this move. FTSE and DAX fell in New York trading as well to close below support area.

MARKETWATCH FRONT PAGE
Major indexes stumble as the Federal Reserve releases its monetary-policy statement.  See full story.

Treasury yields set record low after FOMC
Treasury prices rise, pushing benchmark yields down after the Federal Reserve says it will buy more longer-term securities.  See full story.

Fed getting more worried about Europe
For the first time in more than two years, Federal Reserve officials specifically mention "strains in global financial markets" as a potential "downside risk" for the U.S. economy, reports Rex Nutting.  See full story.

Fed decides on $400 billion bond swap
The Fed decided on Wednesday to start a new program to twist the yield curve by swapping $400 billion of short-term debt with longer-term maturities.   See full story.

 

Break on upside likely for five indexes Wednesday to Friday

Dow, Sp500, FTSE, SWED and DAX are loading for an upside break which can come Wednesday, Thursday, Friday and next Monday. Here are the buy orders I would use:

Dow: Buy 11.322 or better Wednesday, 11.376 Thursday and 11.420 Friday.
SP500:        1194                                       1199                           1204
FTSE          5302                                       5317                           5334
SWED          901                                         906                              912
DAX          5425                                        5462                            5500

I never use stop orders. In this case I do not use limit order.

I will use 8 percent of my deposit for stockmarkets. I will follow the market 24 hours and look for a sudden drop to get in cheaper and the 5 minute trend when it comes o downside.
 

Dow closes Tuesday just a few points higher with low volume.

US markets tested upside Tuesday but fell back the last two hours to close unchanged. European indexes did the same. Markets are now waiting for Fed decision Wednesday. Very choppy trading with no clear trend.

US indexes rallied last hour after selloff in Asia and Europe earlier.

The technical picture is very interesting regarding DOW, SP500 and FTSE for this week. After a last hours rally in US Monday, after six hours trial to push the indexes lower, a powerfull rally finished the day. The support level which held the whole session was the rising 21 day MA for these three indexes. This MA will continue on upside and get stronger by the day. Tuesday and Wednesday the daily 8 MA will turn up and get very strong the rest of the week. This means that a test of the the six weeks low, of this six week sideways trend, is very unlikely. It seems that a test and probably a break on upside might occur this week already. Next week the 8 week MA will turn up if all goes the way I said. However Tuesday and Wednesday could be very choppy.

DAX, SWED, CAC, IBEX and MIB still look very weak but  I think that a positive move on upside in US might change this picture.

OIL has finally started to fall Monday and now there is a sell signal both weekly and daily.

Fundamentally Asia and Europe pushed the indexes down on the weak outcome of the EU finance ministers meeting. US markets opened lower on the same reason. It seems like the markets soon have priced in a Greece default. By holding the markets to fall further US has indicated that enough is enough  about Greece for the moment. The American Central bank FED will start a two day meeting regarding the American interest rates and other ways to stimulate the economy. Since the Fed seldom says anything but good news to the market I expect the result of the meeting to be positive.

Indexes uptrend continue. Downside tests are over for now.

Technicals
Dow, SP500 and FTSE all closed the week above weekly falling 8 MA signaling the downside medium trend is over for now and a test of the upside will now start. The 8 MA will be down week September 19 but then turn up as the technical picture looks right now. This means no short positions but continued holding of long positions. This uptrend can go on for a few months but I hope to guide you day by day.

Dax and Swed has done its five waves down and I think the uptrend will start now. IBEX, CAC and MIB will probably move up as well but the indexes does not show the strength as the first group, Dow, SP500 and FTSE.

The uptrend will not go straight up. It is more likely that this uptrend will be quite slow with the usual daily setbacks.

The most interesting index to buy for upside seems to be the Dax and Swed.

The first group have big head and shoulder tops to test. The 21 weekly MA will show this first resistance area. There are many hurdels or restistances on the way up.

There is always a risk that my predictions could to be wrong. As soon as I see a change I will write about it here.

Fundamentals
Euroland has decided to come up with a solution how to handle Greece in mid October. At the same time the Parliaments should also have voted on the 8 billion for Greece and the 440 billion to the fund which currently holds 250 billions.
Numbers for joblessnes, retailsales, GDP growth, etc. will continue to drop in. Currently all countries are close to zero in growth. The American definition for recession is two quarters with negative growth. This is the most important thing for the development long term of the stock market indexes. It is a slow process. Currently analysts are divided on the coming economic outlook.

My thoughts
The European debt crisis will disturb the markets now and then but quarterly company results are just weeks ahead and will have influences.
Regarding Greece my guess is the following. Germany wants to see a default of Greece. First the EU countries must be able to take care of their banks with big exposures to Greece bonds. I think that this is solved soon and money could be taken from the EU fund with its increased capital. Germany also wants to see an orderly default of Greece and give help regarding who should be hit by losses etc.
All this should be ready in mid October after one or more countries have voted no to give out the 8 billions and a new package  for Greece. Then the media will discuss the coming default which could take place before year end. The liquidity for banks will come from the ECB with help from the US Fed until the end of the year.
However when the markets understand this the focus will immediately be on Italy which then has the new boss of the ECB. How this will play out will be very interesting to follow.

If I am correct the indexes uptrend will finish around November, December and then the big fall starts taken the indexes below 2008 low. These are my thoughts right now.




  

CET 14:15 Indexes have taken a new high but now sideways to down

The indexes have reached resistance levels with a new high but the hourly trends are now sideways to down. US will open in a little more than an hour.  Lots of discussions after debt news Thursday and many analysts say that we now want to see immediate action plan for Greece, Italy and Spain. Euro area finance ministers are meeting now with Geithner to get an action plan but the old differences have not been solved about next big package for Greece and 440 billion to the Euro fond. Parliaments will still make the decisions so I do not expect any big news from the meeting that some analyst crave.Later today and Saturday all 27 finance ministers in EU will meet. Many analysts say that if there is no action plan Monday morning the sellers will step in again.

The euro stopped at critical resistance point and the hourly trend is now down. Remember that the hourly trends can change quickly especially if the robot trading starts in the US. So the US will decide from now how the indexes will be traded this Friday. Everything is open after the negative views from many analysts.

The indexes uptrend has now become a daily uptrend from hourly.

Dow, SP500 and FTSE closed Thursday at the top in New York in a strong uptrend which now has been upgraded to a daily uptrend from hourly.

European indexes show the same strength and all trends continues.

The Euro is also in a strong hourly uptrend.

Today's news that the two biggest central banks in the world will provide liquidity for three months to all commercial banks in Europe was greeted by all the markets with applauds which gave further strength to to the three day uptrend. How long this happiness will last is difficult to say but Fridays trading seems  to go on upside. After the weekly close I will tell what is likely to happen next Monday.

Dow Jones Industrial weekly September 15,2011

This chart shows the current picture of  the Dow with 8, 21,34 MA:s. The 8 MA has been touched three times by the weekly bars but twice they have closed down the last trading day of the week. The current price is just above the moving average (MA) which can bee seen on the last bar. The blue MA is the 21 week MA is also down and have  crossed the 34 week MA which is down. Since the 34 week MA is down as well the bear market is in place according to me.

The weekly chart is the most important of all charts to decide the longer trend. I am expecting the 8 MA to turn up quite soon and then the medium trend will be up. Later the 8 MA might cross the 21 MA on upside but it will not cross the 34 week falling MA which shows the long term trend.

Why the stock indexes fall

1. Economic reports from USA and Europe points to slower growth or no growth in the economies. If the growth turn negative and stay so for two quarters there will be a recession.

2. Europe has a debt crisis. During many years Greece and Italy have borrowed money by selling bonds. Banks in Europe have bought many of these bonds. The bonds could be issued for 10 years for instance. That means that Greece or Italy has to pay the bond owners the money after 10 years. Usually Greece cannot pay that money so they issues new bonds on the same amount. This has worked perfectly for a very long time. Suddenly Greece says that its economy is in bad shape. At that moment the bank holding the country’s bonds gets nervous. The media tells the world how bad the economy is in Greece. Next time Greece has to pay back money because the bond is now ten years old the bank will not buy new bonds for the money in Greece. The country then starts an auction of bonds to pay the bank. Since Greece now has a bad reputation the yield on the bonds gets much higher. Soon the interest rate becomes 50 % and then no one will buy the bonds. Then Greece can default. If it does all the banks with billions of euros in Greece bonds will lose the money. The media tells the world how much money every bank has in Greece bonds. If it is too much other banks get worried that they can lose what they lent this bank and refuse to lend this bank any more money. Then the bank will be downgraded so no one wants to deposit money in the bank and in the end everyone wants to take out their deposits. Then the bank defaults. Many of the banks big customers among companies lose their money and then they can default. And so it gets on.

Number 1, the recession coming or not is now just a wait and see game. Governments cannot do anything this time because they have no money to stimulate the economy. Interest rates cannot be lowered because they are already in the bottom.

Number 2, the debt crisis. As long as Greece pays the bondholders they will not default so the banks are safe. If the bonds cannot be sold the ECB can buy them and they do but they do not have enough money for bonds especially if Italy cannot sell their bonds. The 17 euro countries are now trying to give ECB very much more money but here comes the sticking points. The parliaments have to agree. Many countries have a very slim majority and the members of parliament change their mind often. It is enough if one country says no, Germany for instance or Finland or Holland. Hopefully we will know in the end of September. The second problem is the downgraded banks which have difficulties to do business already. Will the customers accept to be nervous for many years to come or will someone big customer leave the bank and what happens then?

All indexes rally on Merkel, Sarkozy talk and close near days top Wednesday

Dow, SP500 and FTSE which are the strongest indexes accelerated the uptrend to close on 8 week falling MA.
The hourly trends are still up but further advancement above todays highs is not very likely. Just fifteen  minutes before close in the U.S. heavy profit taking started pushing the indexes down.

Dax,CAC,IBEX, MIB and Swed rallied as well but only to their falling 8 days MA:s.

EURUSD is trading up in a channel for the third day and closed just below channel top.

The short trend is always very difficult to predict especially during the current news flow about Europes debt problems. The US finance secretary talked very positive about Europes solidity and Merkel and Sarkozy said the right things. This does not change the fundamental picture a bit but gave traders a reason to close short positions. An unexpected break of the important 8 week MA should definitely get more short covering but the buyers know that this is a risky projekt. I have to wait and see what Asia does tonight and the opening of European bourses Thursday morning to say more.

Europe is nearing a full - blown banking crisis says Pimco's El-Erian

Pimco's El-Erian says Europe is nearing a full blown banking crisis and that the International Monetary Fund needed to act quickly.

El Erian is the person in the U.S. I trust the most.

Markets continuing towards the falling 8 week MA awaiting retail sales report for August.

Short trends still up after slow trading.

All indexes moved further up Tuesday in the two hour trends but 8 day and 8 week falling MA:s are expected to stop further advancement soon.

Merkel and Sarkozy are expected to talk about the dept crisis Wednesday.

Many U.S. analysts are trading the markets only on debt news from Europe and media all over the world are watching every move European politicians do. Lots of rumors in circulation and the markets are waiting and hoping for many answers. My opinion is that the debt problems will be the main focus for a long time and it seems to me that the German Parliament will deliver the answers in late September. Merkel and Sarkozy cannot foresee what the Bundestag will do but can probably give news which will affect the trading.

U.S. bonds have been in a strong uptrend since the beginning of July which makes the yields falling accordingly. There are no signs of topping out yet but this trend seems to me to be the last rally in the uptrend that started in the mid 1980:s.

All indexes opened lower but closed on high changing short trends to up.

The Euro and the stock indexes fell on open but closed on upside changing the hourly trends to up at close. Short covering and profit taking set in when the opening lows held for several hours making the two hour trend rally just before Monday close.

Politicans in Europe said a default of Greece not in the cards this month.

Several gaps were created and some of them were closed in late New York trading. Markets likely to test the upside Tuesday with falling 8 day MA:s as resistance.

Germany may get ready to give up on Greece

A majority of german taxpayers will not pay anymore to Greece, Bloomberg says late Sunday.
http://www.bloomberg.com/news/2011-09-11/germany-readies-surrender-in-fight-to-save-greece-euro-credit.html

Germany is said to prepare for a Greece default. This might be one reason why the Dax has fallen the most of the indexes. German banks has the most Greece debt which will hurt the German banks hard but they can probably cope with the help of money from the European fund and the European Central bank if the bank stops buying Italian and Spanish bonds.French banks which also have big exposurs to Greece is said to have enough money to shield their banks.

If Greece defaults I think Italy will immediately get into focus and this countrys debt to European banks is too big to manage  and that could be the start of a very ugly cenario quite fast. Nobody knows what will happen if Greece defaults and just the suspicion by the markets might be devasting. Germany takes a big risk here but it is easy to understand the German taxpayers. It is better with a default now than next year.

Dax have now lost 32,5 % since May. Euro in free fall Friday. Stock indexes fall sharply.

The Euro broke last resistance level in its 6 month sideways trend against the dollar and closed the week at its low 1.3651. All the long trends are now down and the euro is in a bearmarket.

Dow, SP500, Swed30 and FTSE closed down for the week but no new lows. The daily trends are now down but the choppy trading will probably continue the coming week and hourly trends can easily change.

DAX closed on a new daily and weekly low at 5166 which is 32,5 percent below its top in May. All trends are down.

CAC, IBEX and MIB got new weekly close lows. All trends are down.

Oil is still holding up but closed down at 112.57 for the week. Trend sideways to down.

Week September 12 will be of great importance for all markets. The daily down trend should be in place at least for Monday and Tuesday for the U.S. indexes which are the strongest so far.

The big fundamental question just now leading the markets is the health of the European banks. Also the role of the European Central Bank and the stiff opposition against giving more money to Greece from Germany, Netherlands and Finland. My own opinion is that these big questions can not be solved quickly and that the market knows that perfectly well. The same goes for Obamas 440 billion help to get the labor force back to work. The Congress cannot pass anything. The market knows everything. But there are things that can stop the fall at least for a while for instance the enormously oversold conditions i certain markets.

CET 14:40, Euro hourly trend down but bottom is beeing built.

The U.S. stockmarkets will open CET 15: 30 and the stock indexes can technically break up or down during the trading session that ends CET 22:00.

The Euros low so far is 1.3788, now trading 1.3824. During the U.S. session a lot can happen. If the big traders believe that a real break on downside for the Euro is a fact then you might see a sudden strong rally on upside to take out the short positions. Then a trial of the 1.3788 will occur.

FTSE seems to stay within its current small trading range just below the 8 Week MA. Dax has strong support at 5352 and might try the upside from here.

CET 11:45, EURUSD new six month low. U.S. indices turning down.

Very slowly the euro has fallen Friday morning against the dollar and a few minutes ago hit at new six month low. The currency can still crawl back up but I regard the drop as a serious start of the day.

Asia and Europe have traded the Dow and the SP futures slowly down and the two hour 8 MA has now crossed the 21 MA on downside which is a first warning that a fall may occur.

European indexes hardly move. FTSE has touched the falling 8 week MA again without penetration.

Dow, SP500 and FTSE unable to clear resistance.

U.S. indexes and FTSE tested the 8 week falling MA without penetration and all fell back to close at the days low. The two hour 8 MA turned down but the 21 MA is still up. This means that Asia or Europe can set a new trend before U.S. opens on Friday. There is also a possibility that the trend will be set in the U.S.
Right now before Asia has opened I can not tell where Fridays trend will go. Why this situation is so important is because todays trading could have formed the right shoulder in a head and shoulder formation and a sudden sharp drop could even break the neckline open up a very sharp drop in the U.S. indexes. It is very important to follow Fridays trading until we know what will happen. This is the worst case scenario. Europe has not even covered the gap and the trading is very slow. There are no news during Friday that could start something.

EURUSD has taken a new six months closing low and there is very little left to start the sharp drop. Here as well the daily trading must be followed the whole day if you are trading this currency pair.

I think that a new trial of the 8 week MA will not occur but the technical situation is extremely complicated just now.

Dow, SP500 and FTSE rallied Wednesday closing just below 8 Week MA

A powerfull rally by Dow, Sp500 and FTSE closed the gaps and advanced to try the falling 8 week MA for the second time during Thursday. Dax seems to build a weekly double bottom just now for a possible rally next Monday. However Dax, IBEX, MIB and OMX have not even closed their gaps and the overall picture seems quite weak for these indexes.

The 2 hour trend is still up for all indexes and the daily MA:s still give a mixed picture for further advance. Obamas coming job speech Thursday to the Congress seems to have helped the US indexes. Personally I doubt that the trend by the three strongest indexes will close this week above the weekly 8 MA so I believe in a top out trend for Thursday and Friday and a possible change of trend to down soon.

EURUSD are working to get below the sideways trends low. If it holds this week a new attempt will soon follow. Crude oil has rallied but are still in a dangerous technical situation which will force the oil to fall even if it can hold up for another week or two.

I still keep cash but I will short the SP500 if it hesitates to close above the weekly falling MA and  I really want a few short positions in oil before the drop.

U.S. indexes closed on upside Tuesday turning the hourly trend up. Sell signal for the Euro.

No index manged to close the gaps Tuesday but the hourly trends turned up in most of the indexes so a close of the gaps might come Wednesday.

The medium and long trends are unchanged. Monthly and weekly trends are down. Daily trends are still difficult to  decide because of choppy trading with wild swings. This pattern is expected to last.

If there are no changes in trends and no important news I might leave the blog for a day or two.

The technical picture of  EURUSD finally seems to show the next big move. The currency pair has gone sideways for six months. There is now a weekly sell signal for the Euro against the dollar and the break can come quite soon on the downside, lasting for a long time and be dramatic. I will follow the EURUSD until the break starts.

Germany DAX fell 5,3 percent to a new low Monday.

With the US closed Monday for Labor Day the Asian and European indexes fell sharply. The European STOXX 600 fell 4,1 percent. DAX fell 5,3 percent to a new low.

US stock futures were open and fell in light volume and so did crude oil.

Since all European indexes opened with a gap on downside the coming days might be very choppy. These gaps in indexes always get covered sooner or later and the American traders use to send the market up to close these gaps only for a few minutes when the trend will continue down. A short sell order at last Fridays low is what many professionals will put in place in a situation like this.

The two hour bar chart with 8 and 21 MA:s is the best way to follow the short trend when the market goes like this. IBEX, MIB and CAC are very close to take a new low as well so this will be an interesting week.

The fundamental reasons are the  European debt crisis and Americas job market.

With no new jobs in the U.S. in August the Dow fell 2,2 percent.

The worst job report in 11 months sent the European and US indexes sharply down to close at a weekly low. The strong daily uptrend took a beating and the trend is now unsure. The hourly charts trend are now down.

The recession thinking is back on the first pages. Italy has difficulties to implement the austerity program and Greece problem which was meant to be solved last week for the next payment could be in limbo. As I have said many times in this blog the recession will come back again and again and this question will not go away for a long time. With the worlds biggest economy unable to get new jobs a new stone has been put on the world economy.  
Most American analysts and Mr Bernanke believes that the US will not enter a recession and that keeps the rallies coming. In Europe except for the UK the underlying scare for the euro to collapse and the GDP:s hoovering around zero makes the analysts more pessimistic.

The consumer sentiment is low in both continents and the manufacturing indexes get lower. It is a slow process and the stock markets might get rocky for a long time.

I am still holding only cash and waiting for an opportunity. I still expect a sharp drop in oil and I think that this is the place to be for short trader.

U.S. indexes fell September 1 and closed at the bottom.

A second test of the the falling 8 week MA was unsuccessful and Dow and SP500 fell below yesterdays low and closed at the bottom. Tomorrows jobs report in the US at 14.30 CET will set the tone for the last trading day of the week.

Dow and SP500 touches falling 8 week MA and closes below August 31

The strong uptrend by Dow and SP500 only touches the falling 8 week MA before closing below on August 31. European indexes also move up but still lack the strengt compared to the U.S. indexes to reach the falling 8 week falling MA:s.

The important point for Dow is a daily close above 12.007 which is 61.8 % of the drop from the top.

This morning all the 8 month MA:s is down for the second month in a row and as long as they are down the indexes in my definition are in a bear market. These long MA:s will stop any attempt in any rally for the next six months exept for Dow and SP500 which technically have a chance to change their bear market status. However first I want to see Dow make a daily close above 12.007.

Yesterday Germanys congress was said to accept the increase of the EU funds to help European banks if necessary. However there are many more political decisions which have to be made in Euroland to guarantee the safty of Greece economy for instant.