I was saying yesterday morning that a pinocchio through trendline support was generally soon followed by a more definite break, and we then saw that hourly close below rising support from the December 19th low that I was looking for:
Shortish posts all this week I think as I'm a bit distracted offline. On SPX we have nice clean trendlines now, and those trendlines are suggesting that upside is limited and a more significant retracement is close. I wouldn't go so far as to call this a rising wedge on SPX, or if I did I would take it from the 1333 high and next 1300 low, as the long move from 1202 to 1333 without touching either trendline, was too long in my view to qualify the overall setup as a rising wedge. Support is in the 1340 SPX area and resistance is in the 1360 SPX area, and on a break of the support trendline I would see the obvious target at the rising support trendline from the November low in the 1305 area. Support to watch on the way there is at the middle daily bollinger band (20 DMA) in the 1327 area:
The Greek Parliament passed the austerity measures required for the Eurozone rescue yesterday night, and the spontaneous street celebrations in Athens are showing that, for the moment at least, the greek public seem to be solidly behind the deal, even if those celebrations seem a little over-exuberant by non-mediterranean standards. It's reassuring to see however that the greeks are united, as they undertake a program of austerity and reform which might well prove overambitious for a more weak and divided nation:
As my loyal readers already know, almost every indicator I follow, both technical and sentiment, is bearish.
But, something today made me particularly happy.
As I mentioned yesterday the negative divergences have been building over the last few days and it appears that at the time of writing, equities are likely to gap down heavily on reports that the Greek deal is falling apart. I'm surprised by the Greek news I have to say, I was expecting it to last at least a week or two after being finalised, though against that, the deal is so obviously against the best interests of Greece, and has so much resistance to it there, that perhaps this is not such a surprising development after all.
Quite a few interesting charts this morning and I'll lead with a chart showing the daily bollinger bands on SPX, NDX and RUT. You can see how these indices have been walking the upper bollinger band upwards during this amazingly strong move, and if we are to see a retracement here, which seems likely, the obvious targets are the middle bollinger band in the 1320-5 area on SPX, with some strong support in the 1333 area, and rising channel support (marked) on NDX and RUT:
Obviously calling tops has been a hopeless task during this big bull move, and on the bigger picture I'm not seeing much to suggest that we might see a really big reversal here. We don't have anything in the way of large bear patterns here really, on equities anyway, and the lack of decent big support trendlines on the major indices makes it particularly hard to tell when a big reversal might happen. There is also currently very little in the way of topping patterns, and we are between big resistance levels on SPX.
That said, though it might be hard to point to a recent example, nothing goes up in a straight line, and even in a big bull move you will see some substantial dips. It might be another mirage of course but we are once again in an area where we might see such a dip. Let's consider the evidence.
I posted the Transports index chart yesterday and observed that the rising support trendline from the October low was being tested, and that a break below it would be a sign of weakness. Well it has broken, and that is most definitely a sign of weakness:
Continue reading "Some Divergence Here (by Springheel Jack)" »
I was joking on twitter yesterday morning that the short-term bearish setup I was looking at looked very tempting, even if people were having to climb over piles of bearskin rugs to get to the screens to see it. Needless to say there was a report early in the day that the Greek are very close to finalising their no-default default, and both EURUSD and ES broke up hard to trash that bearish setup. This market remains in a strong uptrend and JBTFD is still the order of the day.
It still looks early to think about a top on EURUSD and GBPUSD at the moment. I've been posting my big picture USD chart and the obvious target is a hit above 76.72 in mid to late February. I can't see any reason to doubt at the moment that we will see that level hit, and at that point we will see if that rising channel on USD can hold:
Well, the market presents a mixed bag - - some major indexes look bullish (which explains why I finally relented by actually BUYING some stocks, which is probably a huge short signal in itself) and others look bearish. Let's take a look at them, in bullish/bearish order:
The NASDAQ Composite pushed above its long-term resistance line late last week, and it's been inching higher ever since. This chart is bullish, period.
The Dow Jones Industrial Average (the Dow 30) likewise beat its "bin Laden high" from last May 2nd.
The Apple-powered NASDAQ 100 has been on a huge tear since Thanksgiving, and, as with the broader Composite, is straight-up bullish.
The strongest argument for the bearish case (which could be badly damaged by a single "good" headline at any moment) is the EUR/USD.
It turn, the $HUI Gold Bugs Index is poised for a beautiful fall (provided it stays under that centerline).
The Russell 2000 is right up against resistance, and this is a point where it could easily slip back to the high 700s.
The Broker/Dealer Index, $XBD, may have double-topped.
Lastly, the NYSE Summation is a screaming sell right now. Look how it's configured compared to Spring 2010, shown on the left, just before its big tumble.
So your guess is as good as mine at this point. At this moment, I'm 50% in cash, and of the 50% in equity positions, 25% is long and 75% is short. It's pretty much all about the Euro at this point, folks. We are all FOREX traders.
The longer term trendlines from October and November are looking a little thin here, as I've mentioned before, but in the shorter term there is no shortage whatever of decent trendlines, and looking at those this morning I think everyone is likely to get a surprise, as there seems to be a powerful consensus that we are going to see new highs today, and my charts are suggesting a move down instead. You be the judge, but I'll show you what I'm looking at.
Short term the move up since last week's low on ES has formed a very nice looking rising wedge cum channel, which I posted yesterday. I suggested yesterday morning that this looked likely to retest the high in the 1342 area before hitting the support trendline and I was very pleased to see that play out exactly as I predicted, albeit in slow motion. The next upside target is in the 1353.50 area at the moment, but I have marked in the potential double-top that is now in play if rising support breaks here:
Continue reading "Trendline Festival (by Springheel Jack)" »
