End of May

We are ending the month of May with a big thud as we fell all the way back to the February low in just one month, erasing all gains that took months to build. We got a hammer, then failed again but it formed somewhat a inverted hammer, then a huge gain and finally a down again. Well the pre-holiday mood didn't help to push the US market up. Right now we are stuck below SMA 200D. Will it be another dead cat bounce or and upside soon?

Hammer

Have been really busy this week! Sorry for the lack of updates! I shall start from my last post where I said a probable rebound. We can't predict what will happen and North Korea certainly sprung a surprise with a likely war with South Korea, followed with lack of confidence with Europe troubles. And thus a downside. We started with a huge loss in the Dow and it recovered back most of the losses hence forming a hammer (you can look up what is a hammer). This very strong hammer signals a likely reversal especially on the strong previous support. So as usual, we need a confirmation. (Last candle not valid as the market running now as I type).

Rebounded

The failed pattern was so amazing, stocks just plunged! Then on Friday, it was volatile but the Dow rebounded again. Will it hit a resistance and go lower? Seems to be one more down wave to happen.

What's seems to be encouraging is the upside volume!

Failed pattern

This is kinda bad. A failed pattern indicating more downside. Hedge funds are shorting.

Ignore last candle. But looks bad.

Dow ekes out a gain

Well it was certainly volatile! Very interesting... last night Dow started red and became redder almost reaching -200 pts. Then I woke up in the morning and saw that Dow went back into green. What's the reason for this? CNBC quoted that professionals are buying in on the cheap price causing erasing of the losses. Volumes seem abit higher than normal. This forms an ugly hammer. Good thing. Just need a confirmation to the upside again. I hope this is not a prelude to double top.

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Not bullish yet

Darn, it was truely a dead cat bounce. I was wrong about being bullish. We have to see if it bounces again on the 150 MA or 100 MA. It might go up and down like a rollercoaster.

Where are we heading?

We rebounded as I mentioned in the last post. Ignore the last candle cause I was running real time charts and DOW was open while typing this entry. DOW rebounded at the 150 MA instead of the 200 MA I mentioned. It really volatile now and it's quite difficult to give a call especially when it is in MAY. Right now I see is a bullish sign upwards, however volumes are decreasing. There is still not much people buying as probably again the shock from Europe's problem. Gold is surging as investors are trying to hedge over stocks and Euro dollars? Euro dollars is dropping like mad as many like George Soros are shorting the Euro dollars. Euro dollars is doomed?

It's the end of dividend giving stocks. So what's to invest is in companies with good profits and strong cash flow.

Hopefully this is not a slow bleed of stocks. It will really defeat the purpose of buy and hold.

Months of Bull, Wiped out in a matter of days

I'm back, however back at a really bad time. For the last 4 days DOW just PLUNGED, basically wiping out months of accumulated profits due to Europe's problem. Coincidentally, this news exposed during the month of May, where there's a saying "Sell in May and go away". Sometimes it makes me wonder that if news are specifically released deliberately at certain timings or it's just a matter of twisted fate?
Take a look, In just a few days, 50, 100, 150 Moving Averages (MA) are broken. That's even faster then the correction during January - February! What's left is the 200 MA(green) support. If that is broken, then it's a really bearish period. The drop in the last few days really shook off the confidence of many investors when they are starting to put their money back into assets. My portfolio consisting of long term stocks also took a bad hit.
Let's take a look at VIX, an indicator which measures fear. VIX has broken out of the downwards channel. Which means that there is more fear to be expected and more drops. I'm anticipating a rebound soon which probably a "dead cat bounce" since the drop is really fast and furious. Probably at the 200 MA support.

Of course there will be opportunities.

*A pinch of salt: I dreamt there was a formation of a head and shoulders! I wonder this is just a formation of a left shoulder? or a head?