WHAT’S GOING ON!?

This time im going to share the graph at the beggining so you can really see what I’m going to explain after that…

S&P500 Index 08-04-2015

The market is just too dificult to understand in daily candles.. at least for now. Lets go through it:

-Chartism: After Octobers ‘flash-crash’ we stopped respecting the trend line that you can see in dashed lines. There is not a clear wave count or any figure that I can notice. Market moves doesnt seem to be respecting any support or resistance except for the 2000 zone.

-Trend indicators: SPAGUETTI, thats it. It doesn’t matter if I use Ichimoku or moving averages (exponential or simple or hull’s) its just a spaguetti plate extremly dificult to read and to trust.

-Oscillators: As you can see in the graph RSI is just in the middle of nowhere. No interesting divergences or anything. Just nothing useful, at least with my knowledge.

-Volume: I really like to use Koncorde indicator for this. It has been extremely useful. I was getting interesting signals and quite accurate information of what the market was doing. But now this is also unclear. Volume goes up but weak hands dont follow strongly and neither do strong hands. It just looks weird.

-Fractal maths: This seems to give me a good explanation of what’s going on… Using FDI we can see that we are in the ‘chaos zone’ which normally means 2 things: (a) the market will act weird for a while and (b) a new big movement might be close.

So in conclusion I just don’t know what’s next. The market is in a weird place. It looks like a strong movement is comming but I’m totally unable to figure out what direction it will take. I know this is something normal in the markets, we can’t predict them but normally we can more or less imagine what could happen. Now we can’t, or at least I can’t. So I’m going cash for USA.

-Cheking weekly chart-

The weekly chart looks better, at least for now. I thing even though we are seeing that the trend is loosing some streng during the last months we are still in a positive trend.

S&P500 week 08-04-2015

As you can see here the trend is perfect. It’s true that i has slowed down but Ichimoku keeps working very good. On the negative site we can see that volume and oscillators look odd. Volume is not that high and the weak hands seem to not be so sure about longing anymore. Also we can see some divergences on RSI that suggest we should see some kind of negative movement or correction.

So looking to the charts I can see that a correction to the 2000-1990 zone would make total sense. If it happens we should not panic because as we see on weekly chart it would be a absolutely healthy correction.

With this new information we can develop a bit more our conclusion. I still wont trade the market right now, because it can be very dangerous but if the market went down to 2000 or so I might start looking for good points to trade a long position.

Hope this was helpful to understand what is going on right now.

See you soon!

Nuño Pére del Barrio

Twitter: @nuopb