AGU - Stock Moving Up Despite Negative Market Momentum

AGU - BUY SIGNAL

I haven't been writing too many analysis lately, simply because the market in general is still trending in a major down trend. With that being said I feel very reluctant to giving BUY SIGNALS as most stocks are showing signs of weakness, trending down and giving SELL SIGNALS. However, I did decide to start looking for stocks today who are moving up or holding on to their current levels despite the market's weakness. One stock which has given us a BUY SIGNAL today is AGU, which crossed up over its 50 day MA today. The MACD, which I usually consider a very reliable indicator has also given us a BUY SIGNAL today. AGU is now actually trending up, while most other stocks in the market are either trading sideways or in a down trend. I still would be very careful before taking any long positions as the market is still trending down. However, if the market does continue lower, one stock you may expect to hold up or not lose too much ground is AGU. Remember that when a stock breaks over one of its moving averages, it is preferable to wait a day or two to see if the stock manages to hold up above it and not reverse back down. AGU's next resistance levels are around $64.30, $68.00, and $70.00.

Dow Jones - In a Major Down Trending Channel

DOW JONES - STRONG SELL

The Dow Jones has fallen once again sharply today, and erased all the week's gains. Like I had mentioned in my previous posts the momentum has shifted from positive to negative since breaking down below the 50 day MA around 10400. Despite seeing two consecutive days of big moves up, it only took one day to erase all the week's gains. The Dow Jones is now clearly trending in major down trending channel. Today, the Dow Jones even fell below the psychological 10000 support level. On a technical point of view there is not much support at 10000, and the closest support level right now is between 9800 and 9900. However, like I mentioned in my earlier posts I think the Dow Jones will head back at a minimum towards its 200 day MA around 9400. Other critical support levels are around 9100, 8600, 8100, and 6400. Before we can hope for any BUY SIGNAL the Dow Jones will have to break back up over its 50 day MA. For now we can expect to see the Dow Jones trend below its 50 day MA as it moves down. Basically we could see a similar pattern to the major up trend we had in 2009, only going in the opposite direction. Again opportunities are now more on the short side. You may see bounces back up here and there, but do not get fooled by these moves as long as the major down trend is intact; you never want to trade against the major trend. It is fair to expect to now see a more volatile market, similar to what we have seen in 2008. As long as the down trend persists, I believe up bounces will just be opportunities to short the market. For those who fear taking short positions and prefer to take long positions, you should look for stocks who are negatively correlated to the market. You have to be very careful when picking your stocks if you intend to take long positions, which I would advise against to. The best option for those who prefer not taking short positions is to simply stay on the sidelines, and cash in whatever long positions you still have, as they are most likely to go down along with the market in general. During uncertain times, it's always best to take a pause and wait for the market to stabilize.

Dow Jones - Testing 50 day MA resistance soon?

Dow Jones - WAIT

After falling as low as 10043 last Friday, the Dow Jones now looks like it could be very soon testing its 50 day MA resistance level, which currently stands at 10431. The 50 day MA has started to shift downwards, but with a BUY SIGNAL given by the stochastic on Monday, and seeing it followed by another sharp move up on Tuesday, I think it will attempt to move back up over its 50 day MA. This was to be expected to happen sooner or later, as it is very common to see an attempt at recovering losses after seeing a critical support level broken, which is now resistance. If the Dow Jones were to manage to move sharply over its 50 day MA, we would have a minor BUY SIGNAL. At that time, the next resistance level we would be targeting for would be around the 52 week high of 10729. A sharp move above 10729 would then trigger a STRONG BUY SIGNAL, and would most likely mean that the major up trend will resume. However, if the market falls back again from the top, this could indicate the possibility of seeing a double top pattern which would reaffirm the end of the past major up trend. Although the market has been moving back up sharply this week, keep in mind that it fell much harder during the past 2 weeks. The negative momentum we saw in the past 2 weeks was much stronger than the positive momentum we are experiencing so far this week. It is normal to see a a few bounces back up after such a move down. Keep in mind that the the Dow Jones is still off by 458 points (4.46%) from its high of 10729. Also, if we look at the weekly chart, the STRONG SELL SIGNAL given by the MACD is still valid. With that being said, I would be very cautious right now, and for those with no current positions in the market, I would WAIT on the sidelines. The next few weeks will be very determinant in terms of the market's direction for the rest of the year. In the very short term we could see more up side, but in the long term the market really has to prove itself and manage to move back up and hit a new 52 week high. The past 2 week's losses did do a lot of damage, and the market will have be driven by very strong positive news to resume the major up trend. There is always the strong possibility of seeing a sideways trend, but it is too early to say. A sideways trend would make trading a lot harder. In a sideways trend you would have to be able to be very good at timing your entries and exits while cashing in smaller gains than usual, as you would then risk of losing it all.