Thursday, January 28, 2010

Osikani’s morning fix

As a look at the markets via the SPX/SP500, none of my comments from yesterday have really changed. Even today's ramp up job still respected the previous TDST as resistance. I post only the daily chart.




I take another look at the markets today, this time looking at the SPY, and using the Anchored VWAPs instead of DeMark. We use the SPY because as volume is not available on SPX, it means that my Anchored VWAP's cannot plot.
I will make a different post regarding the hypothesis behind the AVWAP. For now, just indulge me and read along with me. If the folks on this blog like this analysis, and request it, I think I will complete the notes on the indicator and have it released for free to members of this blog who request it. Unfortunately, it is still having the kinks worked out right now, and is too crude for release.
First we look at the weekly, plotting AVWAps from the major lows and highs. Note that there are really no highs, save the one at 2009/06/08, which was soon violated, and you will see that the buying AVWAP crossed over the selling AVWAP on the day of the violation.



Notice how every downturn never quite even reached the most recent buying AVWAP except the most recent one where you should notice also that this is the VERY FIRST TIME that ANY downturn has breached the most recent buying AVWAP. We expect AVWAPs to act as dynamic support/resistance, so does the breach then make the most recent buying AVWAP now into resistance?
We plot only 2 selling AVWAPs. The first is the aforesaid one at 2009/06/08, the only time we has more than 2 red candles in this crazy bull run. The second is plotted from the most recent high, and its line would be expected to be resistance. If it is breached, this downturn may well have been yet another bear trap.
Next, we use those same points on the weekly to plot the AVWAPS on the daily. This allows us to ignore many of the short term gyrations on the daily chart, which would otherwise be full of spaghetti, if we were to plot every swing AVWAP.



I have added in one AVWAP at the previous (to this most recent) swing high. Again, notice how this AVWAP, supposed to be resistance, was breached, and how the price breached the previous swing high on the day that the buying AVWAP crossed over the selling AVWAP. Also notice that that very line seems to have acted as resistance today, containing the up candle from the ramp job.
So, for the first time in this bull run, we have a cluster of support/resistance above the market. Remember that a support, when breached, changes polarity into resistance; so we have 3 of the most recent resistance lines clustered just above price, and it is the first time that it has happened in this bull run.
Does it really reflect a change in the market posture? I cannot say: the future will tell us. As we all know, the market will go where it will, no matter how much hopium we imbibe, and no matter how much we pray to the trading gods.


And here is the more traditional Osi Daily SPY update.


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