Saturday, 28 April 2012

Weekend update'1 - Weekly Index Cycles

This weekend I will post two main updates, covering the weekly and monthly index cycles. As we now have just one trading day left of April, the monthly chart will likely not change much, so we can start to look ahead into May and across summer 2012.

*I will cover the regular '10 world indexes' next weekend, once we have moved into May. we go....(all charts are 2 year, weekly candles)

IWM (representing Rus'2000 small cap)

We have a bullish engulfing candle, and a close above the 10MA. From a MACD cycle perspective, there is no clear turn back upward yet. I suppose the bears could argue we are just back testing the broken October trend. Only with a break under 78 can the bears regain any degree of confidence, bulls just need a further small move up...a close next week of 84 would be very significant.

NASDAQ Composite

Tech' remains in the post October low channel, and like the Rus'2000, we have a bullish engulfing candle, and a close over the 10MA. MACD cycle is still positive, there is nothing bearish here. First target will be a break over 3128, a mere 59pts away <2%.  That is well within range, and is highly viable within the first few days of next week.


Almost a 200pt gain on the week for the Dow, which is pretty amazing considering Mondays action. However, we are now right back to that problem level of 13300. A break above..and bulls have free air until 13500. However, a fail here..and the oft' touted 'waterfall fail' could occur - first target would be 12200 (a clear 1000pts lower). Bulls will understandably want to get above this level as quickly as possible next week. A mere +73pts gap Monday morning would do it.

Technical indicators are threatening to turn outright bullish again, and if we break above 13300 early next week, the Dow will go + cycle on the MACD, and that will probably be a sign that SP'1422 will be taken out, and a further move at least 2-5% higher within May.

NYSE Comp'

The 'master index' as I like to call it, we've a bullish engulfing candle, and a close over the 10MA, there is nothing bearish here either. I guess bears could again argue this index is also setting up to back test the broken October channel. MACD cycle is still positive, but there is still a hint of weakness in this very broad index.


A bullish engulfing candle, a close over the 10MA, and a MACD cycle that is still +cycle. SP'500 is now a mere 19pts away from breaking new highs. Only a close under the recent low of 1357 would justify any renewed hope/confidence in bear-land. Bulls arguably merely have to hold current levels in the coming week.


What has been the weakest index for many months, remains weak. Transports only gained 0.6% on the week, and the MACD cycle remains negative. There is certainly nothing bullish here..yet.

Its possible we could be in a bullish pennant (although the monthly cycle would argue against this). The direction in which the transports breaks in May will be a critical signal in my view. The range is exceptionally tight, so traders - whether bullish or bearish, can go heavy long or short, with good tight stops.

Only a break above 5400 would clarify the new trend as bullish. Bears will need to see a break below the hugely psychological 5000 level to claim the start of something majorly bearish.


Of the 6 indexes covered, only the Transports is moderately bearish. The other 5 all have strong bullish engulfing candles - such candles that are often reliable indicators of a major trend change to the upside.

Bulls need very little next week, even a flat week to consolidate current gains would probably be enough, and that would set up a bullish May - where we have the Facebook IPO hysteria still to come.

Bears..are in real trouble. A bullish engulfing candle is going to be REALLY difficult to break back below next week. 

The Monthly Cycle update will posted late Saturday.