Tuesday, August 10, 2010

Tick Tock Tick Tock Tick Tock

NYSE World Leaders Index.
  • The 200 day moving average--which has been an impressive support resistance indicator--is providing formidable resistance to further advances in this index.
  • A symmetric A-B-C wave structure is apparent, although it can be argued that the recent highs are a 3 wave in a incomplete bullish 5 wave structure.
  • This resistance is being accompanied by a series of hanging man candlesticks. The resolution of this price consolidation will in all likelihood be explosive!

Financial Select Sector SPDR.
  • Like a spring being compressed ready to explode the exponential moving averages on XLF are converging at the 38.2% retracement level.
  • The Fibonacci fan lines (light blue diagonal) have provided resistance throughout the rally from the lows of early June.
  • The 50% retracement level is at 15.22 which has not been violated.
  • The chart speaks for itself, with the break out and break down levels clearly delineated.

U.S. Dollar Index.
The US $ had a volatility event on Tuesday, initially breaking to the upside then reversing after the FOMC comments. As mentioned last evening, this market is ripe for a trend reversal as shown by the violation of the downtrend line and establishment of a possible uptrend channel. It is much to early to decipher any uptrend channel but the technical condition of the US $ and the transition pattern shown below suggests that there is a good chance of a move to the upside. 79.50-79.75 would be a decent area for a protective stop.

S&P 500

Well there really is not anything new to add, except to reiterate the following:
  • 1107 is incredibly significant.
  • 1130-1135 and 1150-1155 are possible upside targets--although the market has tested the 1130 area a few times and has yet to break above it.
  • momentum is waning.
  • volume is dropping.
  • the small caps are under-performing the large caps.
  • VIX is wallowing around the 22-25% range--watch for a breakout above 28% for an indication that the markets are going to commence a decline
  • The Transports are the most impressive Index, which should be viewed as a cautionary indication that prices could continue higher. (Dow Theory)
  • August 18-21st is the next Energy Date window.

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