Hi friends,It appears to me traders and investors are concerned...

Hi friends,

It appears to me traders and investors are concerned over tomorrow's expected announcements. Certainly, at least to myself, as a holder and trader of some MDT shares, it would provide me a good deal of comfort to try to get a glimpse of what the market is saying TODAY at the close - it becomes easier to believe and hope that the trend will and can continue tomorrow....

Quoting Wilma85 in a recent post : "I would've thought if there was serious doubt about MDT's ability to refinance or get an extension CMBS debt due tomorrow, that we would see a significant sell off today."

Notwithstanding this, I thought it will be of benefit to most of us if I revert to traditional technical analysis with the usual technical indicators that most of us are familar with to see what the market is saying at the close of today, and not use some cyclic analysis which may be less than familar to many.

With this in mind, I have made the following chart of MDT showing its daily price bars:



From the chart above, I observe the following:

1. Prices are poised to test the breakout point of a short term immediate downtrend channel as shown, after displaying two bright candlesticks denoting the improving trend. An oubtreak out of this channel will suggests at least a short term uptrend.

2. Instead of using moving averages that lag the market, I have used the colour coded zero lag moving average from Jurik that is plotted over the price bars to denote the immediate trend as it is zero lag - pink colour indicating downtrend while light blue indicates uptrend. We can see that this zero lag moving average is still in pink, but also note that this moving average is also bending as at the close of the market today - a step that occurs normally before it undergoes a change in trend and also a change in colour.

3. By plotting the short slopes and the long slopes of prices, and demarcating them into bullish region above the zero horizontal line and the bearish below this line, we see both the short and long slopes to be moving in synergy in the bullish region...and are in bullish mode.

4. In trying to gauge the momentum, I also plotted the Momentum Indicator, and found that there is a trigger signal - showing a positive momentum crossover of the trigger over the signal line. In the past, each time this has occurred, such positive momentum crossover has led to better prices at least in the short term until the negative crossover is sighted. We note, however, the momentum is just at the initial beginning state, and can be considered strong only when the momentum indicator crosses above the dotted yellow horizontal zero line. We can therefore say we have initial signs of improving momentum and that is encouraging.

5. I'd like to time my swing trading with the next indicator that shows exit and entry zones as marked on the chart. You can see we have just had a swing from the entry zone.

6. And finally, I've plotted the Overbought and Oversold indicator in the form of an oscillator, indicating general overbought at 70 and oversold at 30 levels. To make it easier for everyone to see the signals visually, I have converted the indicator into a candlestick chart. Additionally, I have marked two specific price levels for MDT based on its historical performance - the top level being the Level to sell whenever the candlestick touches that level, and the bottom level being the level to buy whenever the candlestick touches that level.

You can find comfort that we have just touched that lower level to buy, and halfway in our journey moving upwards to the overbought level and the top level to sell...in other words, today's price action had not led to an overbought situation that makes it relevant for us to sell.

There is of course a limit to what technical analysis can do because fundamental events impact upon the markets, and cause price fluctuations. Instead of charts causing the market to move, it is in fact the market and prices that makes the chart, and any unfavourable event may cause a sudden spike to the technical analysis and charting.

Bad announcements aside, and on the balance of what we know and see at the close of today's trading, the immediate technicals are not painting a poor technical picture. On the contrary, we see signs of improving bullishness and a possible testing of the downward channel...and if that outbreak occurs, we can see better prices.

When shall we exit then if prices really improve?

Remember the overbought oversold level? Once prices hit that upper level marked Level to sell, and if you are a short term trader, that would possibly be a good time to take profits.

What happens when things we expect do not occur? If you are a short term swing trader, of course you will have your stop loss to take care of your trade - and if you are a long term investor, sudden spikes are of no concern to you because prices revert to the mean in the long term and it is fundamentals that you are looking at.

This has been a long post,and I hope it has been useful. May the best prices be yours,

dascore