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.