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We begin our look at the world this week with this monthly chart of the DJI going back to 1928.
I’ve chosen to use only one technical indicator, the standard 14 RSI.
As is easy to see, this indicator has plunged to this level only three times … June, 1932; September, 1974; and now.
In fact, the 1932 bottom didn’t quite reach the oversold level of 25.
In 1974, the RSI began moving back up from this level even though it was not the final Low for stock prices. There were marginal spikes lower in both October and December of that year, although the closing prices for those months remained slightly higher than the September “bottom”.
I use the chart to show why I am now mildly optimistic that we have seen the worst of the crisis and that a multi-month, if not multi-year, Low may now be in place.
But … also as a warning that a real bottom does need time to form, as it did over the final four months of 1974, and that we need to be careful about potential spikes down.
S&P 500 Neptune Price Lines [click for complete printable PDF report including all charts]
For the past few weeks, we’ve reviewed some planetary price line charts and new readers should consult the archives on the website for background on what we’re now discussing.
Last week, I said: “But … this index has a long, long history of bouncing up and down from these exact Neptune planetary lines. And we just hit the Deusie!”
Since then, we’ve recovered above the first Neptunian level. Anyone paying close attention to the daily bars last week will realise the 848-861 was the key level of Support and Resistance up to the Thanksgiving Day holiday.
Friday clearly broke above the price barriers, setting up the potential to reach the next level.
To gauge the chances for that, we need to examine the technical charts.
The most encouraging sign is that Friday’s small-range, half-day did manage to push the 500 above the downtrend line coming down from last September.
There is horizontal Resistance immediately ahead in the range from 908 to 920. There are some P&F chart calculations taken from a one-minute chart which put the price targets for early this week at 902 to 928.
I am concerned, because of the T-squares which start late this week, that this will be only a second degree uptrend … 7 to 12 days.
Concerned, but not unduly alarmed. While the level of the troughs recorded in both the Stochastics and the CCI back-up my concern about the astrological aspects – because they do not show positive divergence from the price – there is very significant positive divergence in the depth of the MACD signal line troughs and the histograms.
Caution. We know it is the CCI which is the canary, especially using our tweaked version set at 6 & 14. It is not confirming the positive divergence displayed by the MACD, which is a somewhat slower indicator.
But, the short-term reading is offset by its performance in the weekly charts …
Here, we are seeing something of the reverse situation from our look at the daily.
There is very significant positive divergence in the CCI on the weekly chart – and it is repeated in the Stochastics and the MACD histograms, even though the MACD signal lines are still on a Sell.
What this means is … we need to be a little careful of the American indices topping out temporarily, and probably this week, but the medium-term outlook is looking much better.
When we consider this chart, in conjunction with the Neptune price
charts we’ve looked at this week and last week, and the very
long-term chart of the DJI at the start of this report, we can start
to feel more comfortable about the potential for a significant rally
I do believe we are on the verge of seeing a momentum shift … from Sell the Rallies, to Buy the Dips.
But, being on the verge is not the same thing as being on the expressway.
Nasdaq Composite [click for complete printable PDF report including all charts]
I am impressed with the Nasdaq … not because the indicators are starting to look a tad weak, dear reader, but because this is a rational rally.
A bounce from long-term Support, not over-done; a rally day followed by a small-range consolidation day; followed by a rally day and another small-range consolidation day.
No gaps, no spikes … no Chicken Little one minute, followed by Pollyanna gushing the next.
With the PPT back in its box, Wall Street may – at last – be starting to behave like a thinking, rational adult, instead of a bi-polar brat demanding interest rate cuts and massive Federal intervention in the pre-Open futures markets.
I won’t, of course, hold my breath.
There is another positive sign in our indicators here …
the blue CCI line has reached as high as it did for the pre-election
rally, even though index prices are lower. That doesn’t mean
we won’t get another price pullback, but it does suggest the
market internals are
The FTSE has broken above both horizontal and diagonal Resistance – with all indicators positive.
The indicators suggest there will be further rally immediately ahead – though with the blue horizontals indicating there are potential roadblocks not far ahead before this index begins its tilt at the A,B,C price targets.
The first is at 4354 and the next at 4536.
Again, the break of the uptrend lines in the CCI and Stochastics
at the last price Low,
We have massive positive divergence in the CCI and somewhat milder divergence in the shallower depth of the MACD histograms.
The CCI and Stochastics have moved to Buy signals, while the MACD signal line is starting to curl upwards.
I’m a little concerned this price rebound falls into the too much/too fast category.
But we could see some sideways consolidation, or even a dip over the next couple of weeks, without doing significant damage to this technical set-up.
It’s not too dissimilar a picture from the 500 … we’re on the verge, maybe even the on ramp, but it’s not yet certain that we’re on the expressway.
Do not, dear reader, be too discouraged by the suggestion for caution. We are, after all, finally heading north again.
Germany’s DAX is behaving cautiously, spending most of last week consolidating Monday’s rally.
Positive divergence in the MACD lines is strong – but not confirmed by the either of the other indicators.
The red CCI signal has crossed above the Zero line, which is positive, and suggests the index should be able to reach at least the next line of horizontal Resistance, at 4874.
There are two higher gaps which need to be filled – at 4998 and 5142. They are potential price targets in the near-term.
I seriously doubt the DAX’s ability to reach the higher
gap at 5617 before we see another multi-day pullback, but it should
become a legitimate target in the longer-term rally likely to follow
any further weakness as we face the astrological aspects coming
Similar behaviour from the CAC 40. We are seeing a different form of rally. In part, it can be explained by Wall Street’s shortened week.
But I think it also points to a more fundamental shift in market emotions. We can see this is beginning to step in controlled movements.
Contrast this with the price bars of the previous weeks, which were gapping and spiking all over the place. Wild mood swings appear to have been replaced by a cautious mood of mild optimism.
It is, of course, early days and we need to see whether it is confirmed by the price action over the next few weeks.
But it is an encouraging sign. It is much easier to have confidence in a rally when we start to get sane, rational, graduated movements.
Another example of the possible mood change was provided last week when the Sensex did not panic after the unprecedented terrorist attacks on its financial capital, Mumbai.
Closing the stock exchange for a day undoubtedly helped, but it’s easy to see from the price bars that reaction to the attacks was controlled and rational – and given the sheer scale of the assault and the number of people killed and injured, that is no mean feat.
Again, I draw attention to the changing nature of the price bars – carefully-stepped with daily overlap and an absence of big spikes.
There is danger here because
the attacks will heighten the tensions between New Delhi and Islamabad.
But, even there, some encouraging early signs have emerged, with
Pakistan pleading for understanding that it is as much a victim
of Islamist terrorism as its
If the attacks prompt a closer, co-operative approach between the two capitals, instead of widening the schism, it would be extraordinary.
There is medium-term buying pressure slowly building in the Nikkei. Again, we are seeing restrained upward movement – and would hope that it continues moving in such a controlled manner.
Coming from a higher Low, we would like to see a higher High develop, breaking the index above the line of Resistance at 9500/9600.
With the T-squares coming up, that may be a big ask … to break above Resistance on its third attempt.
And if it were to happen too soon, it would run the risk of becoming a “false break” pattern, followed by a sharp downside move.
Chinese markets are trying to find a base, considering whether the pump-priming moves emanating from Beijing will keep the economy from slowing too much.
Hong Kong’s Hang Seng Index is displaying stronger accumulation than Shanghai.
The blue CCI is rolling over, warning of potential weakness in the days ahead. But the positive is that both it and the slower, red line are already as high as they were in early November … and at lower prices.
It suggests there’s more upside left and both other indicators agree.
At this stage, I’m not too sure we can trust an immediate breakout above 15,000.
But, if we were to see another higher Low develop, broadly on the price uptrend line, we would expect to see the Hang Seng predicting a better year ahead for the Chinese economy – and markets.
There are reasonably strong indications here that the ASX 200 will challenge key Resistance at 3960 before pulling back again.
Friday’s price bar, coming ahead of trading in Europe and Wall Street, anticipated a better mood coming out of the Thanksgiving holiday.
Which brings me to a point I probably should have made earlier … how long is it since we’ve seen traders happy to take a Long position on a Friday and be willing to hold it over the weekend?
After a day of caution last Monday as the ASX pondered whether or not to break above the sharp downtrend line from early November, the index shot out of the gates on Tuesday.
It spent a couple of days consolidating the move, with a little upside testing, before deciding on Friday the gloom was less pervasive than it has been for many months.
It was nice to see it go sideways into the blue uptrend line, extracted from previous rallies … but a tad worrying to see the damn thing leave a gap behind!
We’re using the very fast 3 RSI indicator here – and it suggests a possible run to 3960.
ASX 200 Neptune price lines [click for chart - and the complete printable PDF report including all charts]
This is a close-up view of the Neptune price lines we’ve looked at over the past few weeks so that it’s easier to see the short-term targets.
The Neptune “mirror” lines are dashed – with a 1st Harmonic mirror at 3985, a little further north than the gap at 3890 and the technical Resistance at 3960.
There is a non-mirror line at 3817 to 3820-ish.
We should also note that by closing the week at 3742, Friday poked its head just above the previous Low at 3724, indicating it should be able to break through the Neptune line at 3820.
The big challenge to the rally is more likely to come at the 1st Harmonic mirror around the 3980/85 mark.
Bear in mind … we’re past the time for a 1st degree
rally (1 to 4 days); we’re on the 5th day (because the first
day was part of the bottom and did not break the previous day’s
High we are not counting it as part of the rally). A 2nd degree
movement is 7 to 12 days
In terms of the big picture, we can see that, so far, this is a fairly standard “relief rally” within an overall Bear.
While the blue trend line on the close-up chart, shows the ASX is behaving perfectly normally within this broader environment, we can see from this big picture that price is ahead of what has been a sustainable uptrend line during this Bear.
The only question here is where, exactly, it stops rising before declining, or moving sideways, to reconnect with a realistic rally angle.
To be honest, the validity of the next diagonal downline to be hit is open to question. The relevant price early this week is roughly 3814.
If we trace that line back upwards, however, we can see it’s
more of a sloppy “best hit” placement, rather than one
which has had several precise hits … so we need to exercise
some caution about whether 3814 is altogether valid as firm resistance,
although it is
And to round out our look at the world this week, here’s our technical picture for the weekly chart.
We can see immediately that a rally which challenges the horizontal Resistance at 3960 and Neptune line at 3980 will also run the index up against the fast downtrend line which has marked this sharp downleg of the Bear.
It is the range at which the 200 faces its most difficult hurdle – and, purely technically, it would be a big ask to overcome it on the first attempt at breaking the Bear’s bite.
There are positive signs. The top indicator is the fast 3 RSI in blue and a more standard 14 RSI in red. Both have breached the peaks they made during the two-week rally into early November.
The blue needs to break above the 50 level on the indicator.
Overall, worldwide … there are signs of a fundamental mood shift developing, with the adults resuming control from the brats. We need to be cautious and wary for a little while longer – but the patient is coming off life support. Good luck - RA
*NOTE: Jeanne Long, professional trader and a leader in the research of financial astrology, was a student of the works of W.D. Gann. She has authored several books on financial astrology and developed the principles used in all the Galactic Investors Astrology software. Randall's technical charts and the planetary price line charts included in this report are created using the Quick Harmonic Trader Software, by P.A.S. Astro-Soft, Inc. makers of Galactic Investor Astrology software.
The World At Large is delivered in advance to Astrological Investing Premium Member subscribers. Randall Ashbourne is a former journalist and political strategist who trades the Australian market..
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