Wednesday: QE tapering ?

DJ Resistance : 16.174      All-time high
                            16.097      All-time high close.
                            16.058
                            15.930

DJ Support       : 15.720      Strong (October pick)
                            15.687      50 days moving averages (50MA)
                            15.550      Strong
                            14.760      Very strong

Technical Analysis :
The DJ bounced up from the strong support area DJ15.721-15.797, technically the importance of this support is confirmed and the bullish bias too. The Dow Jones Index Average over this area is contructive positive and do not fear to be long. Below this support is another history.
It was the same for the S&P at SP1.775 and NASDAQ at 3.995. The two index bounced up.
The support DJ15.900 now is a resistance at DJ15.930. The DJ also is supported with the 50 and 200 days moving average.
The five years daily and one year daily charts have  intact positive trend lines. They work as support and both are not the same.
Please click over the charts to enlarge them.

Fundamentals :
The market behavior has been back and forth in these last days, something that do not surprise us in this time of the year. Specially this end of the year when we are facing the end of the QE3 and we don't know if we are in a robust recovery, the unemployment and consumption still have mist.
Why I am positive? Because the economic news, for example the last GDP numbers, non-farm payroll, Empire State Manufacturing Index (Federal Reserve Bank of New York), U.S. labor productivity, the Tankan Book (Bank of Japan), Europe is turning to growth, U.K. property houses prices are rising, and so on, in addition of the charts and technical analysis conclusions.
Why are the stock prices in these levels? It is because of the liquidity from QE1,2 and 3, the corporations have been reorganized so are efficient, competitive, and the cash they have right now. Those prices have to be adjusted but when? When the factors change and we are going to evalue the new reality.
Mr. Mohamed El-Erian thinks December taper as high as 60%, I have read that 88% of the funds managers don't expect December taper. Mi opinion is that tapering is going to begin next year because inflation is still low in these moments.

Dear trader and investors, this Wednesday all the market is waiting for the FOMC decision. Then, we are going to see how the market reacts. I am still with the possibility of Christmast rally for next week. The mouvements in the finantials market after Christmats are sudden and strong due the lower volume and the few participants.
I try to assist you by giving my views and analysis so you navigate in the market with rationality without emotions. I am a trader, I know very well how hard is to take decisions in these markets and how our emotions affect our trading.

KEEP THE COURSE ACCORDING TO THE TAKEN STRATEGY!

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

U.S. Budget Deal

DJ Resistance : 16.174     All-time high
                            16.097     All-time high close
                            16.058     Monday's high

DJ Support     :   15.900
                            15.797     Strong support confirmed
                            15.721     Strong (October pick)
                            15.550     Strong
                            14.760     Very strong

Very sorry for the delay, it was because I was flying since Tuesday noon until this morning.

Technical Analysis : 
The S&P did a new all-time high and the Nasdaq got highs we didn't see in the last thirteen years. The Dow Jones Industrial Average is lagging but in a constructive way. It bounced up from the strong support spanning DJ15.721 - 15.797. This support area is confirmed now. My opinion is that de DJ over 15.797 is strong and bullish.
The DJ index is still over 20,50 and 200 moving averages. All of these put the index in a positive position and it has to overcome DJ 16.097,all-time closing high, to look for new highs.

Please click over the chart to enlarge it.

The "V" reversal target is about DJ16.600.

Fundamentals :

As I explained in the last actualization of the blog we have to keep the discipline and do not take emotional decisions with these back and forth of the market during these days.

If we are going to have the Christmats Rally, it is going to begin on December 23rd. and finish the first week of January.

We are getting good economic news like unemployment, non farm payroll after a positive earnings season. There is U.S.budget deal which is excellent, we have to analyse the terms for the economy.After all of this,

I feel confortable with the idea to close the year with the DJ over 16.500

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

And now?

DJ Resistance : 16.174    All-time high
                            16.120
                            16.098

DJ Support      :  15.900    Closing low on November 22nd.
                            15.860
                            15.797
                            15.721    Strong (October pick)
                            15.550    Strong
                            14.760    Very strong (range support)

Technical Analysis :
We got the small rally for Thanksgiving with a new high in the Dow Jones industrial average. The problem is from now on.
The DJ and S&P did new record highs last week and we faced retracement in the last three sessions. The strong support at DJ15.900.82 as indicated last week worked very well this Tuesday. The 20 days moving average is acting as strong support now (gold line in the last week chart). It is not coincidence or fortune teller, this is technical analysis.
The DJ over the upper range line DJ 15.721 is bullish and strong positive. Do not  forget the "V Reversal" broke up target is DJ16.600 approximately and DJ is in unknown territory.

Please click over the chart to enlarge it

Fundamentals :
What will happen from now onwards?
The market is getting good economic news in the last thirty days. This week we are going to get a lot of important economic news like November employment situation, specially on Wednesday. If we continue getting these kinds of news the blue-chip benchmark is going to hit DJ16.500 this year.
The national budget will be discussed again in the Congress in December.
What do I expect? I think that we are going to face some retracement and corrections which is very good for the stock market. People are going to sell some positions in the first two weeks of December  to balance their portfolios and to be prepared for 2013 taxes. That means possibly the market is going to be in back and forths for the next two weeks.
The fall of the last three sessions  were originated for fears tapering and today's announcement of a Michigan judge allowing  Detroit bankruptcy process to continue. This last could be the first between other municipalities in financial problems.

Dear traders and investors, normally the market comes down after Thanksgiving. We could get Christmas Rally after December 20. It all depends on the economic news and the mood of the market. Do not get bored during these two or three weeks and do not take emocional decisions. Discipline is the key.

 Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!
Ulises

Dow Jones Industrial Average new record high

DJ Resistance : 16.120    New record high

DJ Support      :  16.030
                            15.900.82 Strong Low November 22nd.
                            15.797
                            15.700      Strong

Technical Analysis:
The blue-chip benchmark got a new record high today. The DJ index lost steam at the close of the session but ended in positive.
The S&P also touched a new record high and the NASDAQ finally overcame 4.000 points, incredible.
Well, we got the small Thanksgiving rally.
We have to pay attention to the broke up DJ 15.721 resistance with "V Reversal" because the technical target should be DJ16.600 aproximately.
The Dow Jones Index is right now over a positive trend line coming from this "V reversal" (blue line in the chart enclosed).
Please click on the chart to enlarge it.

Fundamentals :
Not too much to comment before Thanksgiving.
We got encouraging economic news today as the U.S. Home Prices and U.S. Building Permits. The U.S. Consumer Confidence unexpectedly continues to deteriorate in November. The Conference Board Consumer Index dipped to 72 from upwardly revised 72.6 in October. As I have explained last week the consumer sentiment worries me.

Dear traders and investors, I wish you an excellent time with your families. Le foyer is for me very important, it is the base of the family and I will dedicate these days to them.
Have a Happy Thanksgiving and a Happy Holidays!

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

S&P got 1.803 new all-time high

DJ Resistance : 16.030   New all-time high
                            16.000   Psychological

DJ Support      :  15.797   Prior all-time high
                            15.721   October peak
                            15.540   Important
                            14.760   Strong (range support)
                            14.400   Very strong

Technical Analysis :
The S&P got its all-time high at 1.800 as it was our target.
The Dow Jones index and the S&P are in their unknown territory, therefore it is not easy to define the resistances.
According the technical analysis the DJ is in a positive trend in the short term while stays above DJ15.797. Medium and long term also are in a constructive way. You can watch it in the daily chart.
The six months range was broken up at the resistance at DJ15.797, and the "V" reversal did it plainly at the same level. This should be a very good support and the "V" reversal still has a long way to the upside according to the technical analysis.
What worries me is the volume.  It is true that at the break up volume increased but not much enough for historical new highs. We have to pay attention on this.
Thanksgiving is coming, we will see  if market rallies.
The next charts are going to show you the path to navigate in these markets.

Please, click over the charts to enlarge them.

Fundamentals :

Low interest rates, liquidity and better-than-expected earnings explain why the stock prices are so high therefore the Dow Jones Industrial Averages is in new historical highs.

The U.S. economy is increasing slowly and Europe is leaving its downfall. The U.S. economy needs to grow faster  in a sustainable way and without  the consumption increase there is no recovery.  What worries is the consumer confidence. If saving rather than spending due that they fear about losing their jobs, the demand of goods is going to be weak , then the corporations are going to stop hiring because their expectations about sales. The investments will slow since they do not expect better sales and so on is the chain. Finally they are going to fire workers, the salaries will decrease which means no inflation, the possiblities for the deflacion will be latent  and continuing with this scheme we will be like Japan in the 1990s.

Do not be scared, I tried only to explain what happen when deflation comes.  U.S.A. is far from that scenario and Europe showed healthy signs of a possible recovery. The crisis comes from 2008 and we are finishing 2013, it has lasted too long. It is the time to correct the course definitely that concerns us all. I think that the market needs a healthy correction but over DJ15.797 it is strong with a clear upside.

I am still optimistic with the stock market because there are positive fundamentals in front of us besides the technicals. But we can not neglect this time.

After we have gotten our target S&P1.800 do we deserve a rest? naturally not. Sometimes we win, the most, and in others we lose but we are always in the markets trying to do our best. Passion is the great difference.

Dear traders and investors, Thanksgiving is coming in ten days, it is an important holiday. For us, traders and investors, generally it comes with a small rally. Let's see it! 

Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!

Ulises

S&P failed new highs

DJ Resistance : 15.797 All time high

DJ Support      : 15.721 October peak
                           15.580 Minor
                           15.540 Strong (hourly chart)
                           15.410
                           14.760 Strong (daily chart)
                           14.400 Very strong (1 year daily chart)

Technical Analysis :
Finally DJ got new all-time highs and a weekly close over 15.721 (October peak). The blue-chip benchmark penetrated the upperside of the range ( 14.400 - 15.721) being the leader this time. The DJ index is still over 20,50 and 200 days moving averages and over the positive trend line and in the positive channel from the lows of March 2009 (watch last week chart). All of these are bullish.
The S&P failed trying to get new highs (over October peak 1.775). Right now its resistances are S&P 1.771.95 (all-time closing high) and 1.775.22 (all-time high). Maybe we are facing the S&P exhaustion if we consider the overbought indicators and we could get a healthy correction in November. I say that because the Nasdaq is lagging now. The S&P is ready for new highs but when?.
The DJ index and the S&P promise new highs in the short term, and its median and long term inclination point for higher.
Please click to enlarge the chart

Fundamentals :
The fundamentals are more difficult than the technicals specially in these times.
The U.S.A. economy is growing slow, but growing. We still have in front of us the budget approuval (December) and the debt ceiling (February) among other incertainties like the consumer sentiment, unemployment, tapering and so on. The earnings season is positive, the corporations are healthy and have cash. The  world needs a sustainable growths, that is the real problem.
I reed on Monday an article in the WSJ by Alexandra Scaggs "Five years after the finantial crisis, individual investors are piling into stocks again amid sings that the U.S. economy is slowly gaining steam. The buyers, many with investment portfolios that were scorched during the market meltdown, are climbing aboard a ride to new highs in the Dow Jones Industrial Average".
As you know when everybody jumps into the stock market it is considered a contrarian indicator.
I would like to suggest to read the next article http://www.economist.com/news/finance-and-economics/21589439-rich-world-and-especially-euro-zone-risks-harmfully-low-inflation in The Economist about deflation and ultra low inflation.
Live is not easy, it is a fight. I am optimistic by my nature. I have learned that one has to do his work studying and analyzing to develop solid and sustainable positions to face life or markets if so we want to call them.
Janet Yellen, nominee to take over as chair of the Fed, heads to Congress on Thursday for her confirmation hearing.

Dear traders and investors, rationally I consider that the market is in a positive way that we will see higher levels based on fundamentals and technical analysis. We should have two rallies before the end of the year, for Thanksgiving and Christmast. This is my opinion.
Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!
Ulises

Dow Jones new high?

DJ Resistance :  15.721      All-time high
                             15.680.35 Record closing high

DJ Support      :   15.543
                             15.500     Minor
                             15.375    Strong
                             14.760    Strong
                             14.400    Very strong

Technical Analysis :
As I explained last week the Dow Jones encountered a big fight between bulls and bears in the the levels of its all-time high. It is not a coincidence, it is the defined battle field where sellers and buyers are. The S&P is in unknown territory and the Dow Jones is lagging. The Dow Jones needs a weekly close over DJ15.721 to confirm that it is following the S&P in new territory. For that, the Dow Jones index has to overcome DJ15.658, August peak, DJ15.680.35, record closing high, and 15.721, October peak.
Technically the Dow Jones has this three positive factors ;
- Dow Jones daily chart shows the index over 20,50 and 200 moving average(MA).
- Dow Jones  index has formed a "V shape reversal" in the daily chart of the last two months and the range is very clear DJ14.760 to 15.721.
- The Dow Jones is still over the positive trend and in the positive channel coming from March 2009.

According to the technical analysis also it can be the DJ drag down the S&P if the DJ could not penetrate the resistances. Be aware!
The S&P should drag up the blue-chip benchmark.

Fundamentals :
The U.S.A. economy is growing in a slow mode. The market needs a sustainable growth. The October non-farm payroll and unemployment are coming this Friday.
The other important point for growth is the consumer confidence. Without consomption the economy is going to be weak.
Those are the predominant factors for this week.

The bulls and bears are fighting in these high historical levels of the market. That explains why the Dow Jones could not overcome the resistances but the pullback is shallow, I find it bullish. The bulls are concentrating its forces to attack the resistances again. The bears have a hard work in their lines to stop the bulls. November and December are the high sales season of the year.
Dear traders and investors, are we going to have Thanksgiving and Christmast rally? Fundamentals and technical analysis are pointing for the rallies.
Good luck, viel Glueck, buona fortuna, buena suerte, bonne chance!
Ulises