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Saturday, July 14, 2012

Saturday, 7/14/12 update

The intermediate term bullish case for equities is still the preferred perspective for this site.  The selling of the last couple of weeks lacked intensity.  Although the market moved lower, the bears never seemed to take firm control, and the rally off the low of last Thursday has an impulsive look to it, although it still needs a 4th & 5th wave to complete.

Market technicals also look bullish.

Internal statistics still show that volume as measured by a ratio of  Volume on up days/Total volume (using a 30 day base) as well as the McClellan  Summation Index are both still in an uptrend.  The McClellan Oscillator has dropped from an overbought reading at the onset of the recent sell off and is now in the neutral area, so it has possibly reset.  (Note: Als Indicator is a mish mash of A/D, volume and momentum statistics used by the author for many years, it works very well as a bottom finder but not so well otherwise).

EW Counts

Bullish alternate
The ES narrowly avoided the 1317 level considered a red flag for the bullish case this week with a low print of 1319.75 on Thursday.  The action since then looks impulsive although it needs a 4th & 5th wave to complete as mentioned earlier.  If this count is correct the ES/SPX should rally strongly from this point.  A rally up past the 1375 high of Jul 5 will help cement the bullish case.

Bearish alternate
The pattern since the Jul 5 top is a little unclear from a bearish perspective.  Best interpretation at this point is for 5 waves down into the Jul 10 low at 1330.50 for Minute W1 with a (very) irregular flat being formed for Minute W2.  On this basis a likely target for Minute W2 is at the .618 retrace of Minute W1 at 1358.00.
ES 1388.00 is the red flag level for the bearish case.


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8 comments:

  1. Hey Al, I've been keeping record of your analysis and its great! Question though, what are the yellow highlighted areas in your first chart?

    Thanks,

    Peter

    ReplyDelete
  2. There are 4 indicators on the chart, 1st one is "Als Indicator" which is a combination of daily A/D, volume & momentum statistics that I dreamed up in the 1980's - it works pretty well as a bottom finder, if you'll notice the yellow areas on the price chart line up with a reading of .50 or below on "Als Indicator" and are pretty accurate in identifying significant lows.  The limitation of this indicator is that it's only really good at finding lows and not much else.

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  3. Ahhh I gotcha. I should of reread your second paragraph - the information I asking for was sitting right there. Would you also interpret "lows" at oscillation readings at 1 on the "Als Indicator"? It seems like a couple of lows were made around that range however short and not necessarily long.

    Thanks :)

    Peter

    ReplyDelete
  4. Actually 1.00 is a decent short term trigger but it needs to be used with some care.  I've marked the same chart with green highlight at the below 1.00 bounces, as you can see fairly reliable but some false signals and some very ST bounces.  

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  5. That's amazingly accurate, probably one of the better oscillation indicators I've seen. It doesn't appear to lag as well! Is it only functional on the daily time frame?

    Sorry for the questions, but your work is intriguing!

    Peter

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  6. Yes it is based on daily statistics so only works on daily chart.  I'm going to include a chart of this in the daily updates in the chart section of this site.
    What does sifu stand for?

    ReplyDelete
  7. Sifu in Cantonese stands for teacher, tutor, master, and father. The story - I was lost after college and felt misguided. It was due to the institutional philosophy that states, "to learn - you need guidance from mentors and degrees as proof". After graduation, I created websites with the intention of profiting off of advertisements but failed in the end. At this point, I gave in and believed the institutional stigma. Reluctantly, I picked up this book - the Warrior Within by John Little, which entails the philosophy of Bruce Lee. He was often regarded as Sifu Lee by his disciples. Sifu is what I want to become, but something I have yet to reach.

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  8.  Sifu not in martial arts, but in business and technology.

    ReplyDelete