Friday, July 15, 2011

Stock Market Analysis, EOD, EOW, July 15, 2011.

In the morning analysis I mentioned that I expect some bullishness in the market from the coming week. My analysis was based on the COT data and the developing “Three Peak & A Domed House” chart pattern in the market. Also in terms of timing, unless the market goes up now, there will not be enough time for the black hole manipulators to push the market higher before September. Plus, the earning season is starting in earnest from next week. Google gave a good boost and Apple is sure to follow.

I also said that I shall take a call whether to go long, purely from trading point of view, depending on the market action today. The markets did go down below yesterday’s level couple of time. At one point it seemed that the 1300 level in SPX was about to break down. However in the last hour, the market rallied high. Is it the irrational movement of Option Expiration Week which I mentioned or is someone expecting some very good news over the weekend? The market ended with very strong close and from the depth of despair, such push in the last hour on a Friday, does not come without any reason. To get an idea of the price action, take a look the following chart.

For most part of this week I have been sitting outside and watching the market action without taking a part in it. I am not a day trader and I do not do scalping. My bias is more longer term. I advised everyone to be in cash, told not to short at this point and be ready to buy when the opportunity comes. That does not mean the coast is clear. Far from it. Nothing has been solved. The farce test result came out of Europe convincing no one and yet Euro held. Greece is going to default for sure, but we simply pretend and extend and gain some valuable time for the Banksters. Europe will have a credit and banking crisis and growth in USA is nonexistent or might even be negative. The debt problem in USA is so massive that it will never be repaid. With so much negative news, isn’t it natural for the stock market to climb higher? At least from the contrarian point of view! When everyone is expecting the market to tank, it will do just the opposite.

I shall present the bigger picture over the weekend but for now, I think it is time to slowly test the water. Next week may be a bit choppy with market going back and forth but I think SPX will now push higher again. I do not buy into the theory that volume is needed for higher price. That may have been true when ALGOs were not running the show and manipulation was tad low. Like you saw the last push up, the market can and will go up on absolutely no volume based on faith and hope and of course manipulation. That may not be a good investment strategy but sometimes it is good for trading.

Now, the most important part. Enjoy your weekend!