The Glass is Half Full

In my last ezine, I mentioned the bearish market indicators that were showing up on the charts. So, I figured it was time for a quick update.

So far, the market bounced from its oversold conditions and found resistance within the Kumo. I mentioned both of these possibilities in my last ezine.

But let's look at an updated chart.

The above chart shows the price resistance for the Dow inside the area of the Kumo. You can also see how RSI and Stochastics became maxed out inside the Kumo.

I've drawn a blue arrow to point out the red line that is drawn at 10100. This line is the Kijun-Sen line and represents a longer term moving average of sorts. You can see how price has been struggling with this line over and over again.

I've also drawn a line at the RSI which is sitting on the 50 line here. That line is also a decisive line.

Which way will we go? I have no idea. The Tenkan-Sen has crossed back above the Kijun-Sen line, which is a mildly bullish move. But, overall, price is still struggling beneath the Kumo. And Bernanke's testimony on the Hill today didn't help matters much. But, hey, he just speaking the truth as he sees it.

It reminds me of my kids argueing when they were little. As each of them presented their arguments, I would often say "you're both right", because it was true. The glass is half empty and the glass is half full. You can argue all day long for either side. But you're both right.

Here's another chart of the Dow from a different perspective.

There are two elements to the above chart.

First, you can see the descending trendline for the Dow. We have yet to create a sustained rally above that trendline so far.

Second, I've drawn a Fibonacci Retracement from the same point. For those of you who are in the MHT chat room, you know how much I look at that 38% Retracement. And once again, the Dow has failed to create a sustained rally above that line.

So, the market is at a crossroads. You can argue bull or bear. But, the truth of the matter is that we really can't call it for sure right now. We'll just have to keep an open mind and play the market as it reveals itself to us.

Hope your trading is going well.

Sincerely, Bob Joiner