Technicals | Nov 20 2014
Bottom Line 19/11/14
Daily Trend: Up
Weekly Trend: Up
Monthly Trend: Up
Support Levels: 2020 / 1977 / 1905 / 1820
Resistance Levels: Nil resistance (all time highs)
Technical Discussion
'We still could get further complexity to this move yet the high probability certainly sits with a significant low being in place at 1820.' Just like choppy overlapping and labored price action signals caution, strong smooth impulsive price action reflects preferred direction and trend dominance. In the case of U.S Indices, the trend is clearly up. Just some foot notes from a global perspective. The decade wait for a free trade agreement between Australia and China has finally come to fruition. A big positive for our economy looking forward. German ZEW Economic sentiment figures comfortably beat expectations last night which is also some overdue good news for this part of the world. PPI month on month in the U.S (the price change in finished goods by producers) beat expectations last night. And even though recession talks are recently being fed via the media re. Japan which has created some market volatility, technically a dip has been expected, and to this point longer term we remain bullish the region. The S&P 500 is clearly bullish, yet interest does sit with whether other regions around the world are now going to start playing some catch up ?
Reasons to stay longer term bullish:
→ S&P 500 earnings continue to be well supported at this stage of the economic cycle
→ The IT sector is seeing ongoing rapid expansion and innovation
→ scope for a healthy retracement off these levels needs noting
→ Wave-3 high of lowerr or higher degree locked in at 2020 with recent weakness regarded as shallow and healthy overall within a corrective Wave-4
Well you can't keep a good bull market down. Yet when you see price action like this that is so strong with no dips or retracements, unless you were super aggressive down towards the 1820 lows, low risk entries have virtually been nil ! We are still in a quandary here as well in regards to our Elliott Wave labeling, or more specifically our exact interpretation of where we think the trend is presently placed. We've been holding onto our cyclic bullish views for a number of years now and still view the trend off the 2009 lows as having plenty left in the tank. Yet the September highs we are still unsure as to whether a lower degree or higher degree Wave-3 has been locked in. It may seem like pedantics, yet if it is a higher degree Wave-3, then more time may still be required for the higher degree Wave-4 to complete. Yet basis the strength of the move off the 1820 lows, it does look likely that the bulls are back in control again and ready to take this well higher over the coming months. Based on time factors, it would then be likely that the 1820 low is a lower degree wave-(iv) only, with price now embarking on a wave-(v) of 3 to the upside. Overall its strongly bullish which ever way you wish to slice it.
Trading Strategy
We need price to start subdividing via a 5-wave move to try and get on board from a trading stance. This will then provide opportunity for us to trade off any upcoming wave-(ii) retracement. Price is overbought across all time frames with some bearish divergence present on the weeklies. Yet we are coming up to the seasonally strong Xmas period, so if a wave-(ii) to the downside is going to transpire, it really needs to get on with it over the next few weeks !
Re-published with permission of the publisher. www.thechartist.com.au All copyright remains with the publisher. The above views expressed are not by association FNArena's (see our disclaimer).
Risk Disclosure Statement
THE RISK OF LOSS IN TRADING SECURITIES AND LEVERAGED INSTRUMENTS I.E. DERIVATIVES, SUCH AS FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CAREFULLY CONSIDER YOUR OBJECTIVES, FINANCIAL SITUATION, NEEDS AND ANY OTHER RELEVANT PERSONAL CIRCUMSTANCES TO DETERMINE WHETHER SUCH TRADING IS SUITABLE FOR YOU. THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES, OPTIONS AND CONTRACTS FOR DIFFERENCE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. THIS BRIEF STATEMENT CANNOT DISCLOSE ALL OF THE RISKS AND OTHER SIGNIFICANT ASPECTS OF SECURITIES AND DERIVATIVES MARKETS. THEREFORE, YOU SHOULD CONSULT YOUR FINANCIAL ADVISOR OR ACCOUNTANT TO DETERMINE WHETHER TRADING IN SECURITES AND DERIVATIVES PRODUCTS IS APPROPRIATE FOR YOU IN LIGHT OF YOUR FINANCIAL CIRCUMSTANCES.
Technical limitations If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
