This is the weekly chart of the Wilshire 5000, which includes 5000 component stocks and as such is the broadest snapshot of the US stock market. The top horizontal line is the 62% fibonacci retrace level of the 2007 bear market, which is of vital importace in large movements. Follow along that line and you'll see the Wilshire has bounced along it several times the past decade, making it an important support / resistance zone as well. Now follow the arrows from top to bottom. The top area is the current price level of the Wilshire at 12229, a mere 214 points from the retrace line (it's already up 153 so far this week). The middle area is pointing to MACD. This should be above it's zero line when prices are rising, and below it when they are falling. Prices are still rising but this is negative...a bearish divergence. The bottom arrow is pointing to stochastics, which visually do three things..when the blue crosses the red you get a sell signal, which we've had. When they're above the
midline you're in an uptrend, which we are. When they approach the very top of the window or the very bottom, it's an indication of extreme overbought or oversold, meaning things are too giddy or pessimistic. It's not often you get this many indicators to line up. Throw in the fact the Wilshire will have rallied 80% or so from the March bottom without a meaningful correction (greater than 10%) and there's a very high probability the bears will probe short
and the bulls will take money off the table..
at the same time. Setting us up for the long awaited correction.
Game on.
This is the weekly chart of the Wilshire 5000, which includes 5000 component stocks and as such is the broadest snapshot of the US stock market. The top horizontal line is the 62% fibonacci retrace level of the 2007 bear market, which is of vital importace in large movements. Follow along that line and you'll see the Wilshire has bounced along it several times the past decade, making it an important support / resistance zone as well. Now follow the arrows from top to bottom. The top area is the current price level of the Wilshire at 12229, a mere 214 points from the retrace line (it's already up 153 so far this week). The middle area is pointing to MACD. This should be above it's zero line when prices are rising, and below it when they are falling. Prices are still rising but this is negative...a bearish divergence. The bottom arrow is pointing to stochastics, which visually do three things..when the blue crosses the red you get a sell signal, which we've had. When they're above the 
midline you're in an uptrend, which we are. When they approach the very top of the window or the very bottom, it's an indication of extreme overbought or oversold, meaning things are too giddy or pessimistic. It's not often you get this many indicators to line up. Throw in the fact the Wilshire will have rallied 80% or so from the March bottom without a meaningful correction (greater than 10%) and there's a very high probability the bears will probe short and the bulls will take money off the table..at the same time. Setting us up for the long awaited correction. Game on.
Posts
No comments:
Post a Comment