Friday, November 23, 2007

Mid-term Trend

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The question is simple: is this the end of the mid-term down-trend, or we can see further slide down.

Below I have posted the S&P 500 and NASDAQ 100 1-year charts

SP 500

    We may see decline in the volatility index. Each time high volatility is seen near support levels and current decline is not an exception. The VIX is still at high level and it would be nice to see further VIX decline – it would confirm the reversal

    Each time at support levels we see high volume – now we may see that trading volume become lover. The drop in volume may indicate that there the selling power that pushed market down become exhausted

    MACD and Stochastic are still at low levels – it would be nice to see them moving up as a confirmation of the trend reversal

    Over the past few session we see that the NASDAQ 100 moves basically flat while S&P 500 and DJI moved down. The similar situation was in October when, on October 11, 2007 we saw the beginning of the downtrend that was not supported by the NASDAQ 100. There is a possibility we may see another NASDAQ 100 drop.

SP 5oo
    For advance/decline indicators I prefer using 60-day S&P 500 chart. The advancing AD oscillator would point to the possibility of developing up-trend. In some cases I use smaller the 1-year frame for mid-term analysis simply to more precisely define the sensitive periods when the mid-term reversal may occure.

Overall my view over the mid-term is that trend reversal indicators are strong and now could be good time to buy for mid-term players, for those who do not mind to stay in the loosing position if the market continues to be in the bear mood. Those who would prefer enter a bullish position more conservatively may choose to wait for more strong up-trend confirmation indicators.

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