To continue our discussion of fractal dimensions, yesterday's hourly SPX chart behaved in textbook bullish fashion. It managed to fully congest itself by meandering sideways to the 20 period moving average.
With that big white candle near the end of the day, the SPX looks to be starting another hourly uptrend. It's certainly got enough "juice" stored up, as measured by the hourly fractal dimension, to get another leg up rolling higher. Although there is certainly no hard and fast rule, a decent hourly trend that manages to send the fractal dimension down towards 30 will take the SPX up about 20 quick points.
So if this nascent trend gains momentum, the SPX should make a move up towards 1060, defying the odds once again. This is a great example of how a strong market congests sideways until it hits the 20 period moving average. By the way, a downtrending market will do the same thing, and meander over to its 20 MA before plunging again.
This bullish sideways congestion was also a reason why I wanted to quickly punt the Rydex positions. Monday's low volume drift was sufficient evidence that a major bifurcation point had not been reached, and the markets were just not ready to quickly reject higher prices.
However, one thing arguing against a streak up to 1060 right here is the low VIX, which is puttering around off its momentum low.
The VIX has not had a problem lately going low, and then going lower. Again, this defies the odds -- but it is what it is. This has been very strong price action coming off the recent undercut of SPX 1000. Indeed, the up move has been stronger even then that sharp downturn, having re-captured the lost ground in less time than it took to lose it.
If you're riding up the left-over QQQ and SPY long hedges, then hang in there to see if the burgeoning hourly trend can do its usual work and get you 20 quick upside points. I wouldn't stick around beyond there. If that trend does indeed move up to that level, it will be a good spot to try another short (non-Rydex, this time) when the trend is reaching exhaustion, with an hourly fractal dimension down around 30 or so.
One last note: I also recommend that you bump up the stop on any left-over longs to SPX 1030, up from 1024. Just use the SPX as your cue for both these SPY and QQQ positions, as the market trades like one big commodity now anyway. The QQQ is just a higher beta version of the same commodity.
Sentiment Dashboard
by Adam Oliensis
SENTIMENT TANK: Drained 1 point to 4% full of negative sentiment.
SHORT-TERM: Hourly gauge has drifted into a flat, neutral situation.
MID-TERM: Progressed 7 points to 33% on the advance side with Confidence moving up to a bullish 3.
LONG-TERM: Unchanged at 30% on the decline side but with Confidence still on the wrong side of 0 at a bullish 1.
BOTTOM LINE: The short-term gauge has now cycled through an advance phase and flattened out into neutral. That short-term advance is what has tugged the mid-term gauge into the green. Ordinarily what happens now is that the short-term (hourly) phase cycles through a decline phase. If that decline can be endured with only minimal damage to the SPX then the next hourly buy signal should give us entry on a solid mid-term signal to go long.
Note: If we see another spasm of buying before an hourly pullback of some size then that should take the tank right down to 0% (empty). If that happens then we'll have a pretty special-looking SHORT signal.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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