Friday, April 8, 2011

04.08.2011




End of the Day/Week Report


The market closed two cents from its new 31 year high at $40.94 and pretty much closing at the highs of the day. This also means that by using a 5pm EDT close that there is eight up days in a row. I do come from the school of thought as there is no such thing as up too much, or down too much or anything like that. If there are people still willing to buy over those whom are looking to sell then the market will keep proceeding higher. The volatility at the end of the day increased a little, but not enough for me to call an intermediate top as of yet. I am very cautious here with the price increases, but feel there can be more leg room to move to the upside. I did state that I would (and did) move to a status of SMALL SELL-HOLD at $40.70 as it was around 2% lower than the number I came up with earlier this week of $41.40. Given the momentum and the volatility, it might be better to wait for the big intra day volatility to spike higher before considering such a thing. I think a blow-off top will occur when the market finally prevails and what concerns me for the top coming soon is the $39.33 level I pointed out this week as a possible 76.4%. The reason I am concerned on this is because this level acted as if I would expect a future 61.8% to act and if this is the case the price objective would be raised two dollars higher from $41.40 to $43.40. For this to be the case the 38.2% level which would need to be key support/resistance would be at the $37.03 handle, and it surely was a very significant mark. The image on this screen (click to enlarge it) shows a linear and logarithmic chart of only a few days. Things are getting very wild when I have to consider looking at the Logarithmic chart because the moves are too massive. We have The trend lines on linear chart shows continuing upward movement and a target towards an upper trend line that it is still a little ways away. This gives me reason to believe a move to $43.40 may take us there for the end of next week. On the log chart, we are not at an area of resistance and has been holding well showing a breakout pattern. This is because it was resistance a few weeks ago and things would get really heated if it can take out this trend line. The blog will be updated on Saturday or Sunday with more.


Where is the Volatility?





on the 10am EDT hour, we finally had moves over one half of one percent with a 0.65% move from bottom to top. This was the first time it was over the one half barrier in around one day. The moves you can see on the image above (click image to enlarge it) is usually around 3/10 to 1/3 of one percent. The last time we have had over 1% moves in one hour goes back to Tuesday at 10am and therefore we have went over four days without a big move. This is tame volatility which is not what you are looking for when you are trying to find or call a long term bubble. In fact, it quite the opposite in that it confirms the likelihood of significant gains to be very high and for the retracement that may follow from here to be a buying dip. I don't think that there will be any one percent hours to close the day, but would be expecting this volatility to kick in soon. I come from a school of though that there is no such thing as up or down to much as well there is no such thing as going sideways for too long and because the volatility is been down for so long, that does not mean it has to stop soon. The next school of thought is that if volatility gets suppressed, then I would expect big moves to happen soon and the longer we stay in a low volatile environment, then the bigger the explosion afterwards.


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