Thursday, March 10, 2011

TSX Reversal?

UPDATE: A few things to watch today:
  • Copper has taken out the previous swing low turning the trend to down.
  • The commodity board is awash in red ink today--bubble burst?
  • Watch the VIX and Transports. Transports are hanging in which may provide buoyancy to the rest of the equity board.
  • 1294.26 low of Feb 24th (March 9 2009 + 720 days) is still holding.
  • 55 day exponential; moving average--which contained the November correction is at 1292.81
  • 21 day moving averages of highs, lows, and closes (trend band) is turning down.A close above 1325 is needed to reverse this occurrence.

The last three days in Toronto have inflicted some damage to the bullish scenario. Monday saw a Bearish Engulfing Line reversal which was followed by two consecutive days of lower highs and lower lows. The only positive to occur this week is the fact that the 13,810.54 swing low pivot has not been taken out----yet!!!!!!

Toronto could be slightly ahead of the American markets from a cycle viewpoint. If this is the case two scenarios could play out: A reversal in the current commodity bubble and a break in the U.S. markets.

The 1294-1333 area of the S&P 500 is important for several reasons.
  • 1306.33 is the Low-to-Low harmonic from the Aug 27th low at 1039.70 and the November 16th low of 1173.00. 1173 - 1039.70 = 133.30. 1173.00 + 133.30 = 1306.33
  • 1306-1308 is the lowest closing levels on the S&P during this recent decline. (see chart)
  • The low 1294.26 on February 24th is 720 days from the March 6, 2009 MAJOR LOW.
  • The major low of March 6 2009 was 666.79. 720--2 cycles--when combined with price is in the middle of the current congestion zone. 666.79 X 2(cycles) = 1333.58 (1332.28 was the high on March 3rd)
  • VIX (chart not shown) has moved out of the sub-20 zone and is building a potentially bullish pattern near the 20-21 % mark. A break to the upside at any time would be quite bearish--especially above 24%
  • If the 1294.26 low is broken it will cause the first lower swing point since the August low. This--if it occurs--will suggest that the intermediate cycle is turning down.

The dollar appears to be hanging on by a thread--BUT..the low so far has been on the anticipated March 4th geometric cycle day. The low was slightly below the High-high harmonic at 76.43. (actual low was 76.29 and close of 76.40 on March 4th.
The Dollar is resting on a very important trendline--a rally from here may be caused by a different commodity market environment.

1 comment:

The Mummster said...

I think you are on the money on all fronts Pete. Metals have been a little bit too frothy and the USD bears have been out in full force. BUT, use the dip to buy XAU and XAG.