Saturday, 20 July 2013

Weekend post

While equities are grinding higher, I wanted to present some predictions on the approaching major top and cautions from other bloggers. Now that we have made a new high, the negative divergence on RSI is evident that is similar to the 2011 top. Back in 2011, maximum RSI coincided with 1344 on S&P. The negative divergence top was at 1375. Between them were 31 points or 2.2% from 1344. Coming back to today, the same calculation would take us from May top of 1687 with a 2.2% rise to 1724. Of course I'm not saying the same thing will happen here. All I'm saying is that this number is in parallel with my channels predictions and the target wouldn't be too far from 1724 if this negative divergence delivers a major top. Below you will find the charts supporting this target.
Two charts from one of the other blogger sites I visit presented very alarming charts on debt margin levels. An analogy of the markets between 2003 to 2008 and 2009 to 2013 has surprisingly similar characteristics.
Euro's long term support has held at the recent bottom. This long term chart and the closer look shows that as long as this red support is held, the long waited dollar rally will not start. The green sideways channel is in charge here.
Cable's long term broken blue support is calling for another hit. I have seen this kind of broken supports acting like magnets. The green declining channel is in charge but its slope is too low to take us towards 1.35-1.40 levels soon. The positive divergence on the weekly RSI delivered this recent bounce. Unless we revisit the recent lows around 1.4830, I expect a strong rally to 1.59-1.60.
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11 comments :

  1. Anonymous21 July 2013 at 03:55

    The problem with margin debt is not the rise of it....but when it peaks and starts decreasing---the top of the stock market is in and within 3-6 months has a huge selloff.Next report on this is July 27th(for July).June had shown a decrease of 2.7% from the May peak.If the margin debt decreases further---watch out!!!!

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    Replies
    1. Bouraq22 July 2013 at 23:04

      I'm looking forward to that decrease mate. Cheers.

      Delete
  2. Anonymous23 July 2013 at 03:27

    Cheers to you as well....thanks for the S&P charts.

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  3. Brandon H25 July 2013 at 03:53

    What trading and charting software you are using? I can't find nice looking candlestick charts like this in any of the stuff I've seen. Thanks

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  4. Anonymous29 July 2013 at 05:26

    Just an update.....another month of margin debt falling from the April high...by just a smidge.Only about 2.4% down since the peak two months ago.Not really a sell signal yet.

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    Replies
    1. Bouraq29 July 2013 at 08:56

      Thanks a lot. Where do you follow these updates?

      Delete
  5. bouraq29 July 2013 at 10:06

    Somehow I can't read your last comment. Could you send it again pls?

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  6. anonymous30 July 2013 at 02:37

    Just google "nyse margin debt"A few items to click on.I read the latest that margin decreased slightly.Only 2.4% since the April peak.From what I ve read it needs to be closer to a 10% drop to influence the stock market.Cheers.

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  7. bouraq30 July 2013 at 08:18

    I got it. Thanks again.

    ReplyDelete

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