The temporary easing of fears in Europe may favor some bounces in stock markets

1. The EUR/USD daily head and shoulders pattern maintains my focus attention. Whiles Euro debt crisis lingering may send the pair down to support 1,3405 and favor the bear, the bounces (that I think short term) from their sell-off bottom lately may head it up to the resistance 1,3697.

2. My reading of SPX hourly shows that a pennant is in the forming. The bounces will have 2 targets: The 1-st target would be Fib50@1,252.5 and the 2-nd target would be around 1,269 - it's the RL of the pennant. My unreliable/negative view to this pennant forming is that it's time frame looks stretch.

3. Because of unreliable pennant pattern due to stretch time frame, I tend to shift to SPX 15' and read it based on the intra-day price action against Fibonacci and Pivot Points.

My Trading Idea:
Bull can play the bounces, however based on the daily price action last 10 days I think bull'd safer minimize longs exposured overnight.
Bear don't be hurry to short. The bounces may be short in size but long in number (max 3 - I think) and it is unpleasant enough for bear. I will be patient with bear.

9:31 AM
UR/USD is approching 1.369 just an inch from the RL 1.3697. No! I definitely don't want to chase this bounce!


10:14 AM
Seems that we gonna see a pull-back

We are almost certain to see the lower low than yesterday low.

1. The Head and Shoulders pattern of EUR/USD daily has been confirmed and this pair may be heading down to the support 1.341.

2. The SPX hourly with Ascending broadening wedge effected and SPX may be heading down to the support 1,210 of Fib38.2 

3. My statistic shows that we are almost certain to see the lower low than yesterday low. With the daily price development like the last 3 days, my statistic from Jan 1975 show:
A) 6/58  =10.3% the higher low next day
B) 1/58  =  1.7% the equal low next day
C) 51/58=   88% the lower low seen next day
** All 12 counts from Jan 2009 to the Oct 31 show Lower Low:

My trading idea: Bear always can find good cover points if he wants to cover today. Bull has no need to be hurry to play the rebound.
Good trading!

9:53 AM
I am a bit surprised to see the Europe markets bounce on the news Italian bond yields ease. Rumor ECB bought their bonds. May be this is just a thin air. Can a sick elephant find a remedy from a cold pill?


10:38 AM
Indexes are just inch to yesterday low however all the bull ETFs have made higher high. It's time for many bears to book profit.

We are not trying to catch the falling knife!

Looking back to lately 3 sell-off days of this 5 weeks plus rally. I think we have no reason to catch the low today and assuming that markets will bounce straightly tomorrow. I think the probability of a lower low tomorrow is high.

The weekly up trend is maintaining

We did see the two consecutive bearish patterns in the 15' chart of SPY before the Nov 8 but they were not effective eventually and what we are seeing in the Nov 8 is the RLs are pierced out two times. This market development want to tell us that it is bullish in short term.

The 15' SPX shows almost the same picture and reading.

Now we shift our attention to the daily chart of SPX. I would like to make a count. We can see that we are enjoying the 26 days of up trend. During these 5 weeks plus we found only 2 consecutive down days which were coincident with the "Referendum Call" of Papandreou (That I am very pleased to correctly sugested that it would not happen or his government would fall). I will keep in my mind that Oct 31 2.5%-down day and if that sell off day happens again, we shall run out of the market as a thieves. All the remaining down days were single and they were pull back or buy-the-dip-days. Bears were short-lived and playing the short sell in those day must be swiftly.

So we may say the weekly up trend is maintaining. It means we'll buy the dips/pull-back but not to chase the rally.

Can we see the pull back? It seems that we gonna see it today Nov 9 when the T2108 is overbought, the SPX daily is about to hit by the monthly down resistance line, the Euro markets are pulling back, ...

And what about the EUR/USD daily? This pair is pulling back and it favors the pullback of US markets today. However it seems in the forming of Head and Shoulders pattern and it would be a threat to the weekly rally of US markets.

Conclusion: We must well follow the market movement and find the supports of the pull back today to decide the moment to buy the dip. Also, the size of the purchase is important as we can decide to buy more or to stay still or to quit the market the next day.
And my last idea is if the pull back is about the size of a sell off at more than 2%, I will hold off my intentional purchase.

SPY, EUR/USD seems want to get higher high.