The index moved sideways for the week, but made a remarkable comeback on the last trading day. The index was able to move beyond the standing resistance level of around 4340 and at the same time create a new high for the year.
The MACD is now above the signal line and above the center line as well. RSI is not that much oversold and still has room for a little bit more upward movement before it reaches overbought area. Value turnover for the 2 succeeding white candle days were significant enough.
All things are on the bright side, and this could be the start of a continued upward movement for the market. However, I would still err on the side of caution and wait for the follow through of bullish sentiments, if indeed this is the start of the upward movement. For all we know this might just be a continued sideways movement with a wider sideways channel, similar to what happened on the bearish actions two weeks ago, where the bearish action broke the support line and 65 day Moving average but was not sustained.
For next week, I suggest treating the recent breaking of resistance line as part of wider ranging movement of the index. This means keeping your stock positions small (i.e. maintaining a larger cash position) and sell when a resistance level is reached or when RSI reaches 70.
APO recently had a very unusual volume last June 24 which created a gap up and a long white candle. The first trading day last week could have well been the start of the stock retracing the gap, but remarkably, it only dipped for 2 days and has since recovered the loss. What is remarkable is that the volume during the recovery period, though decreasing, is still relatively large; large enough to almost cover for the volume on the black candle day.
Looking at the chart from Oct 2010 up to the present, it seems that a rounding bottom was formed and at the same time broken last June 24. Target price for this formation is around 3.50.
Zooming out further, the chart, looking from June of 2007, seems to also have formed a rather big-wide rounding bottom with a resistance of 2.90. If the stock continues to move upward for next week, the big-wide rounding bottom would also be broken. The target price for this formation is around 5.00. You could also interpret the big-wide rounding bottom as either a wide channel or a wide inverse head-and-shoulder formation, either way, all formations have the same target price.
If your investment objective is for the long term, this stock is for you.
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