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Category: Stock Market

From Failed Moves Come Fast Moves

Market participants have been observing what is supposedly called a head-and-shoulders pattern in the S&P 500. Once its lows were violated, they anticipated further downside but this scenario failed to materialize as our benchmark made a u-turn at 1010 points. Dynamic System correctly signaled a long entry.

Since then we could recover quite a bit and rescue ourselves back into the safe zone of 1050 and above. Currently we can consider this a fake breakdown, to levels which the market is unlikely to return to again.

The rally on July 20 was a very encouraging day for bullish investors because on that day we marked a higher low in this new uptrend. Therefore, setting a stop loss order there is the maximum allowance we should give this market.

We are now looking to break the 200 moving average that has been quite a problem area recently, and would welcome a decisive breakthrough of the 1100 mark in the coming few days.

July 22, 2010 | View Comments | View Post

The Rally That No One Joined

It is hart to follow how some individuals believe this whole rally was just so-called short covering activity. What difference does it make whether price goes up through short covering or through new long-term commitments? Can we know it at all? Technically, the reason comes down to the same bottom line. Prices go up because there are more buy orders than sell orders.

There is always a major trend that dictates the wiggles intraday. This has to be the focus to be a successful trend follower because only then the activity being observed day by day can make sense. Just because someone says it is “merely short-covering”, does it mean a trader should better not reap the profits of a rally? It could go down anytime, we are told.

The average investor is missing out yet another huge opportunity because he is being fooled into believing that the next crash is just around the corner. So after the dot-com bubble, where he refused to cut losses and after the financial crises, in which he was forced to give up his holdings, he is now in denial and – as always – doing precisely the opposite of what he should be doing.

Fortunately, at Trend Architect we have the vision to make trend following available to everyone. We put great effort in making this as easy and affordable as possible. With just $39 per quarter you can join the big trends of the financial market.

July 11, 2010 | View Comments | View Post

Volatility is Back

Volatility is back. We have been mainly bullish since April of last year, however, things are seemingly turning gloomy again. Market sentiments have broken down to bearish territory and the volatility index VIX is indicating that investors are getting fearful. Somehow this rally did not feel “right” in the first place but our clients were still able to capitalize on it.

Before the trend bent recently, we exited the market on April 27 (subscriber content), on time to protect client money. Year-to-date Dynamic System is beating the benchmark with a +9.24% return, compared to a loss of -0.16% in the SPY (S&P 500).

Chances are high that the sell-off last Thursday was a trigger to put an end to climbing a wall of worry. Whether it was a computer glitch or not, it definitely was a reason to awaken the long-term buy and hold folks, and get them back to reality.

The bullish scenario we envisioned roughly two months ago is put on hold, as the index smashed through the 200 EMA like a hot knife through butter. We will therefore stay on the sidelines and observe the market closely for a new entry. Be there when Dynamic System gives a signal.

May 9, 2010 | View Comments | View Post

One Likely Bullish Scenario

By looking at the longer term weekly chart, the events since beginning of this year are easily explained. The reasons for the crash and the subsequent bounce back lie in the 50 and 200 EMA. Macroeconomic news such as the Greek debt crisis merely justified such a move.

Now that we reached a new recovery high and are about to break through the 200 weekly EMA, chances are high that the market will go for 1250-1260, a gain of 8.7% from here. Consequently, this EMA is expected to turn around bullish.

If you have been a day trader and observed the S&P 500 closely back then, you will definitely remember how the index reacted strangely at the 1260 levels pre-Lehman Brothers. Not merely on one occasion, but each time we ranged in that area on several days.

During those days, I have been active in trading groups, and kept pointing it out to other particpants. I know other traders found this level weird, as well. We could not explain why, but “something was there”. So as we recover back to this area, I’m going to be very watchful.

Subscribers are already perfectly positioned to exploit such a move. A trading signal has been published on February 25 by Dynamic System. This trend following position is paying high dividends to all of us. Learn more about Dynamic System, if you like to follow our trading signals.

March 13, 2010 | View Comments | View Post

This is bull’s chance to maintain the uptrend

In the past days the S&P 500 and DJIA bounced off the daily 200 EMA. Bulls emerged to rescue our uptrend before violating the November 2009 lows. Due to this rise, the big picture uptrend is still very well intact. We can therefore regard it as an important juncture if bulls really mean it seriously.

The conclusion is that we can expect a bounce here. The first challenge is awaiting us at the upper range of the downtrend channel from which we sold off yesterday afternoon. Breaking this can be an attempt to break the intermediary 1,100 resistance. Dropping below the 200 EMA, however, can result in some serious outcry.

February 10, 2010 | View Comments | View Post
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