Wednesday, October 20, 2010

Stock Market peaks

We'v been waiting a few weeks now to see the stock market peaking. It seems as if the turn has finally come and that the bulls are finally running out of charge. There are numerous signals supporting a down turn in the market is pending now.

As of yesterday the 30 yr T bill chart shows an Evening star or bearish candle pattern at resistance. The dollar has also made an opposite bullish candle pattern or Morning star suggesting that it is going to go stronger the short term. This should put some pressure on commodity demand therefore resource based stocks and emerging markets. Watch the Shanghai.

The Dow Jones Industrial and the S&P 500 also look very top heavy at their respective resistance levels. They have also reached 161% fib extension levels and now sit testing their respective 10ema or 20ema support moving averages. This is dangerous territory if you are a bull or if you are expecting the market to go higher yet.

Our local stock market is also peaking displaying shooting stars at resistance levels. Not to say that this is the beginning of the double dip recession. We are not of the belief that a double dip recession will take place. However, we are due for a wave four count in our current macro wave cycle. A wave four count is a negative move which does go below the lowest point of the previous low. This would be around 9800 on the Dow Jones.

Trade well; not often.

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