The Dollar

Dollar! Dollar! burning bright

In the markets of the night

What subtle hand has bolstered thee

And caused the woeful buck's rally?

In what distant deep or land

Dwells the invisible hand?

Or as Europe sinks in the mire

Have euros been thrown in the fire?

Was it the ifo? GDP?

That caused the euro bulls to see?

Or was it oil? The fall of gold,

That turned the dollar bear trend old?

Who's the hammer? Make it plain,

Behind the rally, who's the brain?

Or is it just the P & L

Of the market, gone to hell?

When the market ran the stops,

And turned the dollar bears to flops,

Did the dollar start to smile,

To see itself now back in style?

Dollar! Dollar! burning bright

In the markets of the night

What subtle hand has bolstered thee

And caused the woeful buck's rally?

Source:

Bank Holiday Poem: The Dollar

Pare sa fie timpul pentru o corectie la trendul descendent..

Convergenta unor zone temporale si proiectii Fibonacci poate genera saptamana viitoare o corectie la trendul descendent al indicilor romanesti.

Trendul saptamanal este puternic descendent si numai o intoarcere hotarata deasupra mediilor mobile de 200 saptamani poate reda increderea cumparatorilor.

BET

BETC



BETFI

Fibonacci, Fractals and Financial Markets

Within the stock market, there is a pattern..

"Restate my assumptions: One, Mathematics is the language of nature. Two, Everything around us can be represented and understood through numbers. Three: If you graph the numbers of any system, patterns emerge. Therefore, there are patterns everywhere in nature...So, what about the stock market? The universe of numbers that represents the global economy. Millions of hands at work, billions of minds. A vast network, screaming with life. An organism. A natural organism. My hypothesis: Within the stock market, there is a pattern as well... Right in front of me... hiding behind the numbers. Always has been."

Maximillian Cohen in Pi

The Return of the Bulls After Bottom Confirmation

As predicted in a previous post, the Romanian stocks bottomed on the 20th of February and started a rally towards obvious resistance around medium term moving averages.

The rally is about to run out of steam due to short term overbought readings and prices will probably retrace around 50% of the recent upward move.

BET



BET-C

BET-FI

12 Trading Rules by Joe DiNapoli

1. Loss of opportunity is preferable to loss of capital.

2. Picking safe, readable, and ultimately high probability trades is the way to go.

3. Use logical profit objectives for all positions. Know your exits and stick to them.

4. Markets are squirrelly animals - make your trading plans ahead of the market.

5. Don't buy new highs or sell new lows - wait for the market to come to you. Buy retracements. If you miss the train, don't beat yourself up - another one will come by shortly.

6. Above all, follow your own trading plan and no one else's.

7. Trade quietly - with the exception of a mentor, tell no one about your positions, profits, or losses. This is especially true for those who are close to you, like your wife, husband, or friends. This self-gratification process or sharing process will put you under psychological pressure to win on every trade and can be a primary reason for failure to follow your plan.

8. Don't carry a sizeable position when traveling. The market will always catch you off guard at the most inopportune time.

9. You are only one trade from humility. A swelled head does not belong on a trader's shoulders.

10. Add to your knowledge before attempting to add to your wallet. Newbie traders think they can become pros with little more than a computer and hope. In this business, hope is a four letter word. Show me a humble trader, and I'll show you someone ready to learn.

11. Develop your sense of humor - you'll definitely need it.

12. Help other traders whenever you can. This is more practical than philosophical - giving keeps the ego in line and when you need help, and you will, you'll find it.

Source:

The Kirk Report

Potential Bottom Ahead in Romanian Equities

BET Monthly



BET Weekly



BET Daily

BET-C Monthly



BET-C Weekly



BET-C Daily

BET-FI Monthly



BET-FI Weekly



BET-FI Daily

BET Index (7.076 points on 18th of Feb) is in strong daily downtrend (ADX readings: 49>25) with potential target in the 6.500 – 7.000 points support area where 2005 highs, 2006 lows, weekly SMA200 and monthly EMA50 lie.
Divergent daily RSI and Stochastic, highly oversold weekly Stochastic (3.79<20), weekly RSI entering oversold territory (28<30) and monthly Stochastic entering oversold area (18.64<20) suggest the downtrend may be soon overdone.

BET-C Index (4.930 points on 18th of Feb) is in strong daily downtrend (ADX readings: 48>25) with potential target in the 4.000 – 4.500 points support area where 2005 highs, 2006 lows, weekly SMA200 and monthly EMA50 lie.
Divergent daily RSI and Stochastic, highly oversold weekly Stochastic (4.26<20), weekly RSI entering oversold territory (27.57<30) and monthly Stochastic entering oversold area (16.42<20) suggest the downtrend may be soon overdone.

BET-FI Index (56.501 points on 18th of Feb) is in strong daily downtrend (ADX readings: 42>25) with potential target in the 50.000 – 55.000 points support area where 2006 highs, 2007 lows and long term uptrend lie.
Oversold daily Stochastic (9.76<20), oversold weekly Stochastic (13.04<20) and weekly and monthly RSI close to oversold areas suggest the downtrend may be soon overdone.

The following remarks apply to all three indexes:
Triple top Fibonacci Time Zones suggest a strong move around 20th of Feb that may be a reversal and bottom confirmation due to the oversold readings mentioned above. Owing to long term mean reverting and oversold readings, the potential bottom may prove to hold the lows for months and even years to come if long term uptrend remains intact.

Nevertheless, indexes are currently down trending until we have reliable reversal confirmation.

Dow Jones and its bearish course..

As noted in a previous post, DJIA Index and the markets around the world (including the Romanian stock market) had a relief rally. As indicated in the mentioned post, the rally ended in the 12.700 points area (the base of the big triangle or head and shoulders formation which had been broken and the last Fibonacci retracement level of the last drop) in DJIA Index where the downtrend returned to its course.

As we can see in the chart above, the index already retraced almost 61.8% of the relief rally and it is oversold short term. The ADX readings (27) indicate a feeble bearish trend on daily charts which gives us hints of range trading ahead between the January lows around 11.600 and the 12.700 resistance area. Any break above 12.700 area gives scope for testing the SMA200 and then the downtrend line above.

In a bigger picture, due to the strong bearish sentiment, on a weekly chart (above) we see a potential support around the uptrend coming from 2004, when (and if) the base of the range fails (the January lows). If the above uptrend fails, the downtrend may pick up speed towards the 2004 lows around 10.000 points (as noted in the monthly chart below).

Indicii romanesti pe termen lung

Pietele financiare au tendinta sa se intoarca la medii (reprezentate prin EMA50 si SMA200) in orice orizont de timp, tendinta observabila pe grafice zilnice, saptamanale si lunare.

Daca in ultimul timp, in urma trendului descendent, pe graficele zilnice, indicii romanesti se departeaza de medii, pe graficele saptamanale si lunare indicii se intorc la medii intr-o miscare fireasca si necesara pentru a sprijini in continuare trendul ascendent pe termen mediu si lung.

Indicele BET zilnic



Astfel observam graficul BET zilnic cum se departeaza de medii intr-un trend puternic descendent (ADX: 47).


Indicele BET saptamanal

Pe graficul saptamanal observam ca indicele BET se apropie de SMA200 si de suportul puternic din jurul 6.500 - 6.600. In acelasi timp indicatoarele RSI si Stochastic intra in zone istorice de supravanzare, semnaland ca intoarcerea la medii este aproape de final. De asmenea indicatorul ADX (26) arata ca trendul descendent pe graficul saptamanal nu are momentan vigoare.

Indicele BET lunar

Pe graficul lunar, indicele BET se apropie de EMA50 si de suportul puternic mentionat mai sus, acestea aflandu-se in zona SMA200 pe graficul saptamanal, intarind astfel zona de suport. Si pe graficul lunar, indicatorul Stochastic intra in zona de supravanzare iar indicatorul RSI se apropie de aceasta zona, semnaland de asemenea ca intoarcerea la medii este spre final. Indicatorul ADX (43) sugereaza ca pe graficul lunar trendul ascendent are in continuare vigoare.

Indicele BET-C zilnic

Graficul indicelui BET-C zilnic arata cum se departeaza de medii intr-un trend puternic descendent (ADX: 46) si are momentan suport la 5.000 de puncte.

Indicele BET-C saptamanal

Pe graficul saptamanal observam ca indicele BET-C se apropie de SMA200 si de suportul puternic din jurul 4.000 - 4.500. In acelasi timp indicatoarele RSI si Stochastic intra in zone istorice de supravanzare, semnaland ca intoarcerea la medii este aproape de final. De asmenea indicatorul ADX (31) arata ca trendul descendent pe graficul saptamanal are momentan forta redusa.

Indicele BET-C lunar

Pe graficul lunar, indicele BET-C se apropie de EMA50 si de suportul puternic mentionat mai sus, acestea aflandu-se in zona SMA200 pe graficul saptamanal, intarind astfel zona de suport. Si pe graficul lunar, indicatorul Stochastic intra in zona de supravanzare iar indicatorul RSI se apropie de aceasta zona, semnaland de asemenea ca intoarcerea la medii este spre final. Indicatorul ADX (50) sugereaza ca pe graficul lunar trendul ascendent are in continuare vigoare.

Indicele BET-FI zilnic

Graficul indicelui BET-FI zilnic arata cum se departeaza de medii intr-un trend puternic descendent (ADX: 37).

Indicele BET-FI saptamanal

Pe graficul saptamanal observam ca indicele BET-FI se apropie de suportul puternic din jurul 55.000 si spre SMA200 care insa se afla mai departe (45.000) decat in cazul BET si BET-C. In acelasi timp indicatoarele RSI si Stochastic se apropie de zone istorice de supravanzare, semnaland ca intoarcerea la medii este curand aproape de final. De asmenea indicatorul ADX (24) arata ca trendul descendent pe graficul saptamanal nu are momentan vigoare.

Indicele BET-FI lunar

Pe graficul lunar, indicele BET-FI se apropie de EMA50 si de suportul puternic mentionat mai sus, intarind astfel zona de suport dintre 50.000 si 55.000. Si pe graficul lunar, indicatorul Stochastic se apropie de zona de supravanzare iar indicatorul RSI coboara abrupt, semnaland de asemenea ca intoarcerea la medii este aproape de final. Indicatorul ADX (42) sugereaza ca pe graficul lunar trendul ascendent are in continuare vigoare.

Asa cum mentionam intr-un post de la inceputul anului, strapungerea hotarata a suporturilor (75.000 in cazul BET-FI) si esecul strapungerii rezistentei (ultima retragere Fibonacci si test de fost trend ascendent) in cazul BET si BET-C au dus la declansarea unui trend descendent cu tinta clara minimele din noiembrie anul trecut care au fost si depasite intr-o miscare ampla si necesara de intoarcere la medii pe termen lung. In acest post graficele pe termen lung sugereaza ca aceasta miscare de intoarcere la medii este aproape de final (desi aici vorbim de orizonturi de timp de saptamani si luni) si o intoarcere confirmata de la aceste medii va fi semnalul continuarii trendului ascendent multianual. Cu toate acestea, confirmarea unei intoarceri nu avem inca si ca atare trendul pe termen scurt si mediu ramane in continuare descendent.

Time for relief rally in US and around the world..

DJIA Monthly Chart



DJIA Weekly Chart



DJIA Daily Chart



DJIA Hourly Chart

As noted in a previous post, the BLS report on employment triggered a strong recession-related bearish sentiment which sent DJIA through the 12.700 support towards 12.000 next support, probing just below latter around 11.700 where long term support is found (see charts above): 2000 highs and EMA50 on the monthly chart, summer 2006 highs and SMA200 on the weekly chart, second day tested low on daily and hourly charts.

Oversold indicators readings and above mentioned long term support may trigger a relief rally back towards 12.700 resistance area (previous support) where also lies the 61.8% Fibonacci retracement level of the latest drop. This relief rally will also benefit markets around the world including the Romanian stock market.

Indicii romanesti BET, BET-C si BET-FI

Indicele BET a testat o zona de rezistenta puternica in jurul valorii de 9.700 unde se intalneste ultima retragere Fibonacci (61.8%) a ultimei curse descendente (intre 10.500 si 8.500 puncte) si linia de trend ascendent (care a cedat la inceputul lunii noiembrie) transformata in rezistenta. Daca zona de rezistenta mentionata nu va fi strapunsa hotarat, indicele BET se poate intoarce catre SMA200 si EMA50 si apoi chiar spre urmatoarele suporturi 9.000 si 8.500. In caz contrar, indicele are drum deschis catre 10.000 si apoi 10.500 puncte.

Indicele BET-C a reusit sa strapunga linia de tren descendent si sa se inalte peste EMA50 fiind insa oprit de ultima retragere Fibonacci (61.8%) a cursei descendente dintre 7.262 si 5.856. Noi teste esuate de a strapunge rezistenta Fibonacci pot genera o retragere spre SMA200 si linia de downtrend devenita suport. In caz contrar 7.000 si 7.200 pot deveni urmatoarele tinte ale trendului ascendent.

BET-FI a strapuns linia de trend descendent si s-a oprit la retragerea Fibonacci de 50% a cursei descendente de la maximul istoric de la 96.452 pana la 64.452. Indicele testeaza linia de trend descendent sparta si transformata in suport, SMA200 si EMA50 precum si suportul puternic din jurul lui 75.000. Daca zona de suport mentionata cedeaza, indicele poate intra pe trend descendent spre 70.000 si 65.000 de puncte. In caz contrar urmatoarele rezistente se gasesc la 80.000 si 85.000 unde se gaseste ultima retragere Fibonacci (61.8%) a cursei descendente de care am amintit.

Important de mentionat ca indicatorii nu semnaleaza trend iar oscilatorul Stochastic se apropie de zone de supravanzare in cazul BET-FI si corecteaza zone de supracumparare in cazul BET si BET-C. Perioada urmatoare este critica, indicii aflandu-se la suporturi (BET-FI) si rezistente (BET si BET-C) importante. Strapungerea hotarata a acestora poate declansa un trend in perioada urmatoare, in caz contrar indicii vor ramane in range.

11 Rules For Better Trading In 2008

1. Be data centric in your approach. Take the time and make the effort to understand what works and what doesn’t. Trading decisions should be objective and based upon the data.

2. Be disciplined. The data should guide you in your decisions. This is the only way to navigate a potentially hostile and fearful environment.

3. Be flexible. At first glance this would seem to contradict Rule #2; however, I recognize that markets change and that trading strategies cannot account for every conceivable factor. Giving yourself some wiggle room or discretion is ok, but I would not stray too far from the data or your strategies.

4. Always question the prevailing dogma. The markets love dogma. “Prices are above the 50 day moving average”, “prices are breaking out”, and “don’t fight the Fed” are some of the most often heard sayings. But what do they really mean for prices? Make your own observations and define your own rules. See Rule #1.

5. Understand your market edge. My edge is my ability to use my computer to define the price action. I level the playing field by trading markets and not companies.

6. Money management. Money management. Money management. It is so important that it is worth saying three times. There are so few factors you can control in the markets, but this is one of them. Learn to exploit it.

7. Time frame. Know the time frame you are operating on. Don’t let a trade turn into an investment and don’t trade yourself out of an investment.

8. Confidence and conviction. Believe in your strategies and bet wisely but with conviction. There is nothing more frustrating than having a good strategy work as you expect, yet at the end of the day, you have very little winnings to show for your efforts.

9. Persistence. It takes persistence to operate in the markets. Success doesn’t come easy, and if it does, then I would be careful. Even the best strategies come with losses, and they always seem to come when you get the nerve to make the big bet. Stay with your plan. If you have done your home work, the winning trades will follow.

10. Passion. In the end, trading has to be about your bottom line, but you have to love what you do and no amount of money is worth it if you aren’t passionate about the process. No matter how much success you enjoy, in the markets you can never stop learning.

11. Take care of yourself. No amount of money is worth it if your health is failing or you have managed to alienate yourself from family and friends in the process.

Source:
The TechnicalTake by Guy M. Lerner

Goldilocks economy seems to be over and the Bear family is heading back home!

The Bureau of Labor Statistics report on employment came out with bad news on Friday. The job creation slowed down somehow more than expected (18.000 jobs versus 70.000 jobs expected) though these numbers are sometimes fundamentally revised the next month and are not so much reliable in my opinion despite the huge importance markets give them. Nevertheless, unemployment rose to 5%, up from 4.4% last February, and 4.7% last month. "Rises of that magnitude are rare (see picture above); it's 1.6 standard deviations from the mean, and at the 92nd percentile of monthly changes since 1950. They're even rarer outside recessions; of the 55 rises of 0.3 point or more, just 18 have been in expansions, and most of those were either close to recessions or in jobless recoveries. In fact, the last time we saw a 0.3 point rise was in January 2001, two months before the official cycle peak. More than half the rise in unemployment came from permanent job losers." (Philippa Dunne from The Liscio Report).

The awful BLS report coupled with the dip in ISM manufacturing index below 50 (though this number is just a conventional line in the sand, it needs to stay longer and lower below 50 to give strong signal of recession) give the markets the sentiment recession is on its way in the US (and the three bears - the Bear market - from Grimm Brothers tale are heading back home to disturb Goldilocks sleep and eat their porridge putting an end to the "just right" economy) while the FED prepares another rate cut.

Nevertheless, economists and international analysts predict a recovery starting the second half of 2008. The timing is just right for the November American presidential elections that can provide good support to the stock market throughout this year.

Looking at the carts we see DJIA Index approaching key support around 12.700 points in a rather trendless price action (as indicated by ADX readings). The failure of this strong support gives scope for next support around 12.000 points and may start building a downward bearish channel for the next several months. If 12.700 points support holds (backed by oversold Stochastic readings), we may see a bounce towards the SMA200 and EMA50 in a range driven price action also supported by the end of the month most probable at least 0.25% FED rate cut. If bearish sentiment is strenghend, any bounce will probably stop short of the high of the previous bounce.

Sources:
John Mauldin - Thoughts from the Frontline
Barry Ritholtz - The Big Picture