FKLI:- Are The Yankees Heading To The Rescue To Save Euroland Ass ?-  12/5/2011

 

One of the "problems" when trading in a low ADX environment is we must be ever ready to change direction. Such is what happened last week when market jumped back above lower Bollinger Band when I cut off all the shorts position. And I turned long when this price action is confirmed by a positive Stochastic. As long as the ADX is low (ie. below 20's), I will continue to trade with the Stochastic over the MACD.

Now that price has gone above the upper band and the MACD has also turned positive, I will have to conclude the bull is having an advantage over the bears, at least for the time being. Place stop at 1480. I take note the ADX has started rising, if it is able to go above the 20's and current price has stayed above its recent resistance level, there is a possibility that the bull may be back in a firmer control. As there is no special bullish formation in the chart, so I will treat this as a minor bullish cycle.

 

The weekly chart turns more bullish biased as the Stochastic continues its upward move while the MACD has resumed its upward move again (last week it dipped its head as if it is going to cross down). The DMI is still negative but the space between the D- and D+ is narrowing which is telling us the bears are losing ground. The ADX has finally dropped hinting a new move may be on the way. I find the most bullish item is the big white price candlestick which now closed above its recent resistance and middle band which is the 20 periods moving average. Many technical traders and some fundamental analysts watch the 20 SMA as a major threshold to identify bulls and bears. The next level is watched is of course the upper band, if price can close above 1512, then the bull can officially declare they have fought off the bears.

Is the big picture changing for the better? I think nobody, including those so called "experts"  honestly know for sure. But there is something interesting happening now that you may want to keep an eye on. And that is there is some subtle hint that America may be heading to bail out the Euroland.

And here's the New York Times :

    WASHINGTON — European leaders are looking outside the continent for help solving the longstanding crisis over the euro, but while the International Monetary Fund may be able to help, it will not be the magic wand they seek.

    The fund may be asked to assist further as leaders of the 17 European Union nations that use the euro meet to prepare for a summit meeting on Thursday and Friday. Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France are scheduled to hold talks in Paris on Monday, and, at the request of President Obama, Treasury Secretary Timothy F. Geithner is meeting with European leaders next week.

Since 17% of the IMF fund comes from US, when if Obama agrees to it, the bailout plan will become a reality because the money is going to be real cash. And if with America's direct intervention, maybe the market will believe Euroland may yet  be saved and attackers will finally back off. This will buy more time for those Euro socialists to clean up their act. The whole thing begins to look like a poker game, it is always about who blinks first.

Other than applying technical analysis to read the market, I often find an understanding of the real political workings would also help a great deal to foretell what would likely to happen. Real politics mean not those biased reports by  the other Chinese papers which always tend to underscore/badmouth everything America does and hype hysterically on anything coming out from China. Like it or not, as far as the financial market is concerned, whatever America does will affect others one way or another. So it always pays if you can read their move unbiasedly.