Free Weekly Heikin-Ashi Newsletter - May 19, 2012 by Dan Valcu

HEIKIN-ASHI NEWSLETTER A WEEKLY SUMMARY FOR HEIKIN-ASHI AFICIONADOS

Issue 30 – May 19, 2012

“I don’t care if it’s a white cat or a black cat. It’s a good cat as long as it catches mice.” (Deng-Xiaoping) www.educofin.com http://heikinashi.wordpress.com

Dear Subscribers, Thank you for all your feedback expressed after receiving the revamped heikin-ashi newsletter. I do hope that its dynamic content will be of great value to better understand what heikin-ashi is, how it works, and why more and more traders use it. For more information on heikin-ashi, you can also visit my blog http://heikinashi.wordpress.com/ and the website www.educofin.com. Since my original article in Technical Analysis for Stocks and Commodities published in February 2004, this visual trend filtering technique has really taken off. Thousands of traders and investors use it in various markets and many trading platforms and technical analysis software packages have implemented heikin-ashi. The recently-published and first of its kind, “Heikin-Ashi: How to Trade Without Japanese Candlestick Patterns” outlines three main features of this technique, most of which were not understood until now: 1. Heiki-ashi as a visual instrument 2. Quantifiable indicator(s) 3. Replacement (or confirmation) for the subjective 100+ Japanese candlestick patterns

To order your copy today please click on this link: http://www.educofin.com/heikinashi-book.htm (And, many thanks to everyone who already purchased this book)

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The Big Picture: Smart Money and the Market

haDelta gets smoother in higher time frames as this one. Although the monthly bar is not completed, haDelta offered an indication of a top at the end of April.

ÂŠ2012 Dan Valcu, CFTe

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Heikin-Ashi and S&P 500

Support on the daily- and weekly haDelta charts. The medium- and long-term charts remain bearish. The market top is obvious on the monthly chart and has been confirmed at the end of April.

ÂŠ2012 Dan Valcu, CFTe

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S&P 500: The Big Picture (Coppock)

A market warning (no confirmation yet) is flagged by Coppock indicator (black line). Looking back, we notice that in most cases, a negative Coppock value confirmed a bearish market that lasted months, even years. (Note: The price chart is logarithmic. In the first place, the Coppock indicator is used to detect important lows in the markets. Although it is not supposed to be used for sell signals, negative valuesof the indicator deserve very close attention.)

ÂŠ2012 Dan Valcu, CFTe

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Russell 2000: The Big Picture (Coppock)

The Coppock indicator for Russell 2000 is negative. (Note: The month is not over yet so the situation may change)

ÂŠ2012 Dan Valcu, CFTe

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Heikin-Ashi and the Dollar

The US Dollar looks bullish in all three time frames. It needs to break above recent resistance.

ÂŠ2012 Dan Valcu, CFTe

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The Gold

Overbought short-term (daily chart). The bigger picture remains bearish (haDelta and its average are both negative) but at haDelta support. A break below current haDelta levels would be very bearish for gold.

ÂŠ2012 Dan Valcu, CFTe

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Market Breadth

The Head-and-Shoulders mentioned last week hit its objective. Here is the target calculation: 1369 - (1422 – 1351) = 1369 – 71 = 1298. The Friday low was 1292.

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Market Breadth (cont'd)

Another support has been hit. Together with the Head-and-Shoulders target, it is a strong(er) indication of a reversal.

ÂŠ2012 Dan Valcu, CFTe

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Thoughts for next week

1. No doubts about the weakness and the direction of the markets; the only event expected is a reason (even a rumor) for a reaction (opportunity to unload) 2. Time to unload until June 17 (Greek new elections) if markets will not get a “coordinated” help 3. Short-term, markets are very oversold. Medium-term, looking to an extended downtrend 4. Head-and-Shoulder necklines for Russell 2K and COMPQX are broken 5. Supports broken everywhere; will act as resistance during the coming reaction 6. Markets play as the Greeks (erratic tones) and Spaniards sing

7. White/Gray/Black Swans may fly over at any time.

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Figure 1: MorningstarÂŽ sectors + industry groups (31) - A daily, weekly, and monthly heikin-ashi perspective.

ÂŠ2012 Dan Valcu, CFTe

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Figure 2: Select Sector SPDRs (9) - A daily, weekly, and monthly heikin-ashi perspective.

Note: The tables in Figures 1 and 2 are based on heikin-ashi change of color indicating a possible change of trend or the start of a consolidation. Other heikin-ashi criteria can be used to generate similar tables. For more information about heikinashi check the daily personal blog http://heikinashi.wordpress.com and www.educofin.com. All tables and charts are generated at the end of the week. The monthly view (Monthly HA Trend) is not final until the end of the calendar month.

ÂŠ2012 Dan Valcu, CFTe

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Figure 3: EURUSD Daily â&#x20AC;&#x201C; Very bearish deep below the Ichimoku cloud. The positive divergence AprilMay and a second one developed recently in May may cause a powerful reaction. The bullish engulfing pattern (yellow) anticipates a reversal.

ÂŠ2012 Dan Valcu, CFTe

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Figure 4: GBPUSD Daily â&#x20AC;&#x201C; Bearish (the close is below the cloud). haDelta penetrated historical support. HaDelta + SMA(3) are an indication of a coming reversal.

ÂŠ2012 Dan Valcu, CFTe

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Figure 5: AUDUSD Daily – Bearish.

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Figure 6: USDCAD Daily – Bullish (above the Ichimoku cloud). Ready to pause.

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Figure 7: S&P 500 â&#x20AC;&#x201C; Last week: 'Odds favor a short-term market reaction.' Flase signal although heikinashi candles were dark. Again, the averages based on haDelta are at support. The Head-and-Shoulders charts (see above) may improve the confidence level.

ÂŠ2012 Dan Valcu, CFTe

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Figure 8: Dow Jones 30 – See S&P-500. The broken support works now as resistance.

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Figure 9: NASDAQ Composite Index – April low has been violated. Even here a Head-and-Shoulders with neckline broken. The calculation of the price objective has been described for S&P 500.

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Figure 10: Russell 2000 – Similar with COMPQX above.

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Figure 11: US Dollar Index â&#x20AC;&#x201C; The key to all markets. Last week's resistance has been surpassed. At a new resistance.

ÂŠ2012 Dan Valcu, CFTe

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Figure 12: Commodity Research Bureau – Very bearish. Positive divergence.

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Figure 13: Gold – Very bearish.

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Figure 14: Silver – Bearish. See Gold above.

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Figure 15: Oil – Even here a Head-and-Shoulders (Jan-Feb-May) with the neckline broken when XOIL.X closed below the cloud. Bearish. Due for a reaction similar to other commodities.

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Figure 16: FTSE 100 – Bearish. Lost all 2012 gains. Will follow the US markets.

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Figure 17: DAX – Bearish (close below the cloud + lower lows and lower highs since March top). In far better shape.

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Figure 18: CAC 40 – Negative for the year and very bearish.

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Disclaimer: This newsletter is published only as an educational instrument for those who are interested by and want to know more about heikin-ashi technique. The information in this newsletter represents authors' own opinions and does not recommend any trades or investments and at no time should the reader infer that any such recommendations are given. The content of this free newsletter is an illustration of how various techniques apply in the field of technical analysis. This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. All information presented herein is believed to be reliable but we cannot guarantee its accuracy. The author(s) may hold positions or other interests in securities mentioned in this newsletter. Past performance is not a reliable indicator of future returns. All charts are for illustrative purposes only. Reproduction, disclosure, or dissemination of this newsletter is allowed with no alteration of its content and only with a mention of its author. If you no longer wish to receive this free weekly heikin-ashi newsletter please unsubscribe by following the link indicated in the original e-mail. To subscribe to this free weekly heikin-ashi newsletter: http://educofin.com/newsletter.htm

ÂŠ2012 Dan Valcu, CFTe

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