End of Year Market Trend

Happy new year to you all

The Dow Jones closed up 108.00 points or 1.25% to 8776.39

The market produced a bullish breakout from bearish trend 2 trading days ago and has now confirmed this breakout  with another fine up-day.

With support coming @ the Fibonacci 38.2% line it is looking like the end of the bear market and the start of a new uptrending market.

The lines of least resistance have been broken by two powerful up days on low volume.

When everyone is telling me that the markets are going to get worse and its the end of the world as we know it, you know we have hit the bottom.

With a couple of small SHORT losses this last month I was getting a bit worried, I thought my system was failing me.

I completed a full chart, entry and exit analysis to try to find the cause of my losses. I come to the conclusion that my entry and exits where sound enough, I followed the signals correctly but noticed my system does actually fail in two places within a bullish and bearish market.

1 : When a bull market starts to turn into a new down-trending market.

2 : When a bear market starts to turn into a new up-trending market.

This bear market gave me early signs to stand aside a few weeks ago but i didn’t see them or take notice of them. I moved the trend lines slightly and tried to continue on the SHORT side. Greed was in me. I was looking at making a killing but my stops where getting hit and I was out of the trades. Stocks where not moving in the right direction after I was getting my short buy signals (bearish rally breakout). ALARM BELLS should have been ringing, but I was still very much a bear.

I have learnt some very valuble lessons from this bear market which will help me capitalize on the up-trending market and I now feel my trading methods are complete.

The trading methods have taken me full circle, from bull market to bear market and bear market to bull market.

Here are my best entry signals in to bullish and bearish markets.

Bullish breakout from bearish trend = Long Signal

Bullish reaction breakout = Long Signal

Bullish breakout from bullish trend = Long Signal

Bearish breakout from bullish trend = Short Signal

Bearish rally breakout = Short Signal

Bearish breakout from bearish trend = Short Signal

Stay tuned and keep a close eye on the Long signals within this new up-trending market.

Happy new year everyone and what a start to the year it is going to be.

Tuesday’s Market Trend

The Dow Jones closed up 184.46 points or 2.17% to 8668.39

This is where it all gets a bit interesting. A few weeks ago I posted charts saying that the bear market was over, see “I thought I was a BULL” category. I was mad with myself because I had gone a bit to early on my analysis.

I have learnt my lesson for shouting my mouth off and telling the world my thoughts. I had a load of emails from people all over the world telling me how mad I was and how could I be so stupid.

So all I am going to say here is this.

The market has produced a “bullish breakout from bearish trend” on an UP day. The downward trend has been broken. All the market has to do now is stay above the upper bearish trend line and break out above the 61.8% Fibonacci Retracement line to end the bearish trend. It looks like the bottom of the market COULD be 7500.

I dont want to get anyones hopes up yet but I like this strong breakout signal. I can see a bullish trend within these new set of signals and I will share them with you if they continue.

What a way to start the new year.

Looking at the next chart, I have connected the Fibonacci using the last rally high and low. This allows me to see if the market is going to find support @ 8086.00

If I am wrong in my analysis, which I don’t think I am. I will give away a copy of “The Trillion Dollar Meltdown” to the first person who wishes me a happy new year in my comments on this page.

Have a great and safe happy new year everyone, I look forward to sharing my thoughts with you in 2009.