Thursday, October 31, 2013

Long Term US Bond Market Technical Analysis - TLT ETF

Long Term Bond Technical Analysis

This bond market analysis video covers the US long term treasury bond fund TLT.  Technical analysis of the bond market suggests that bond prices have made a measured correction off the August 2013 low and that the rally is mature and may be near a peak.  Ideas for short selling TLT are given based on trend lines and technical indicators.  The momentum indicator is reviewed and the weekly chart head and shoulders pattern target is also reviewed.

Additionally, if this is a bear market in bonds, which I do believe it to be on many counts, I would expect a weekly time frame bullish divergence pattern to develop in the technical analysis before a possible bottom in bonds.  That has not occurred to this point, and so with a measured correction against the downward trend, this appears to be a time to be looking at possible short set-ups.

Tuesday, October 29, 2013

Stock Market Update 10-29-13 and Energy Stock Commentary

2 Hour MACD bearish divergence
Click on Chart to Enlarge

This chart is a 2 hour chart of SPY with a MACD underneath.  Prices are making new highs here but with the MACD developing a divergence pattern which is suggestive that we may soon be in store for a minor sell off.  The initial big thrust off the October low may be about over, so it may be more sensible to wait for a sell off of a couple days prior to looking at establishing new long positions.

In the larger context here I want to note that the stock market could be in a very bullish position at this point.  The weekly time frame bearish divergence pattern on the technical indicators that we saw at the September highs has now been invalidated with a breakout to yet higher highs.  And markets at new all time highs tend to perform very well for the most part.  There is no overhead resistance and so momentum can continue upwards for a considerable time on low or declining volatility.

Additionally keep in mind that the annual cycle for stocks historically is most bullish from November through April.  So we are just entering the time of year that typically provides a tailwind for stocks.  Certainly at this point a break of the October low would be a negative technical factor and not at all in line with what I think would be a typical longer term bullish scenario.

What my suggestion is here is that we remain intermediate to long term bullish here on stocks until there is a NEW weekly time frame bearish divergence pattern that develops on the technical analysis of the stock indexes.  Also, clearly the Nasdaq has been the leader on the rally and I don't see any great reason why we shouldn't expect that it will remain so as long as stocks are advancing.

Oil prices have cleared the breakout stop levels on the chart
Click on Chart to Enlarge

I would also suggest that energy and commodity stocks may be ready to get going to the upside here as well.  Crude oil has corrected in line with historically normal corrections in a bull market and from a charting standpoint has made a very interesting flush below multiple highs from the past year.  This has the looks of a major stop running point on the chart and I would not be surprised if the correction has bottomed already or maybe has one more slight lower low before marking a major low that will hold for months and probably kick off a big rally.  The chart above shows a green line at the lowest of about 5 breakout points around the $100 level over the last year.  Price has now come back below that in essence stopping out standing sell orders at or above all those minor breakout points, and in doing so has formed a very nice dual time frame stochastics buying set-up which has already triggered on the daily chart.  I have talked about this stop clearing tendency several times over the years and it doesn't get much more apparent than this on the charts.

If you want specific stock recommendations for potential energy/commodity plays, I would suggest subscribing to my Harmonic Trading Stock Selection service.  Already we have some nice paper profits in FSLR, EXK, and BAS which are currently active trades.

Additionally you are welcome to review the video I posted on YouTube on 8-23-13 detailing FTI, X, FSLR, PWE, SPN, APA, BAS, and CENX as buying set-ups and you can look at where they are now overall.  And I believe that some of these are just getting warmed up seeing as oil has been correcting for nearly 2 months.  If/when oil turns up, I'll bet you a dollar and ten cents that we see these types of stocks move up very nicely on average.

If you are more interested in learning the multi layered analysis behind these types of trades so that you can make selections on your own, then I would suggest taking my stock trading and mentoring course which is the best way I can personally help you become a better trader at this time.

All the best

Pete Birchler

Friday, October 11, 2013

New Market Video Available For Trader's Crystal Ball List

On Wednesday I recorded a market update video detailing price logic, technical analysis, volatility analysis, and put/call ratios.  That video is for members of the Trader's Crystal Ball mailing list.  It can be viewed by registering a login email and password at

Enjoy the video.


Monday, October 7, 2013

SPY Is Testing the 50 Day Moving Average Again

S&P 500 and 50 Day Moving Average
Click on Chart of S&P 500 to Enlarge

In a recent post in July called Testing 50 Day Moving Average, I briefly discussed a not uncommon instance of price action where the S&P 500 had consolidated at the 50 day moving average and had touched it several times in a row or in a cluster without much directional price movement.  Since that post we saw a similar thing happen in August and we are seeing it happen again now.

Refer back to that post to get the idea of what to expect.  Basically they often resolve with a sizable gap.  And we are indicated to gap down this morning to near the bottom of the recent short term range.  I would expect a move to new corrective lows based on this type of price action.  But as occurred in August, it could be an exhaustion type of move for the correction if the uptrend is to persist.

Also just to rehash the price logic situation a bit here, unless SPY is below 162.95 by Thursday of this week, then the price logic would still suggest an upwards trend.  That doesn't mean a high can't have been made and support won't be broken, but it does give us an indication that the market psychology did not tip the scales to downward coming off the recent high.  And it could very well be an indication that the uptrend will continue as we reach the seasonally strong portion of the annual stock cycle from November to April.

So if prices move to new highs, I would suggest having a breakout buy strategy in the works with stops already thought out.

Wednesday, October 2, 2013

Stock Market Analysis Video 10-2-13

Stock Market Analysis Video 10-2-13

This stock market analysis video covers weekly, daily, and hourly time frame analysis of the MACD indicator.  We also look at weekly stochastics at a bearish divergence pattern that is developing.  Hourly time frame indicators have not created the bullish divergence typical at bottoming formations, so we may be set for a move to lower lows for this corrections before it is possibly complete.

Also I review the price logic and important dates to watch for a potential trend change confirmation.  We look at the S&P 500 relative to its 50 day moving average for the typical program trading reversal and continuation pattern that often develops around the key moving averages.