- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
- This blog has a copy of all header posts that I publish anywhere, so that those interested in seeing what my thoughts are on the markets can find them easily.
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Friday, 29 August 2014

Geopolitical Risks

Well we finally got the retracement I was looking for. It was shallow at 23.6% but the 1990 low established the rising channel from 1904 that I had been mentioning as a possibility since last week. Hopefully everyone saw that when I posted it on twitter after the low. There is still a possibility that a double top is forming at a test of the current highs, but I'm expecting another push up first.  I think the next significant retracement will most likely be a significant high, or start the topping process for such a high. SPX 60min chart:
Why do I think that? well I've been looking for that significant high in the 2011-21 range and on the daily chart there is now clear negative divergence on the RSI 5 and the NYMO. In the short term SPX should break up from a bull flag into my resistance area, but the next significant down day will most likely trigger a strong sell signal like the strong RSI 5 and NYMO buy signal I called at the 1904 low. I'm looking for a test of the daily upper bollinger band before that sell signal triggers, and that is now at 2020, along with the other resistance levels in the same area that I have talked about. SPX daily chart:
My July projection for TLT is chugging along nicely and TLT is now close to channel resistance. There is a possibility that geopolitical events might cause TLT to break up through channel resistance, but failing that I will be looking for at least some consolidation or retracement there. TLT 60min chart:
The wild card here is Ukraine. Markets have so far shrugged off the news that Russia has now invaded Eastern Ukraine with ground troops, in part perhaps because western leaders are in denial and calling it an incursion rather than an invasion. The reality is though that Russia is now waging a conventional war on Ukraine, and the way that develops could be the trigger to start the correction that I am looking for on equity markets in the near future. I'm looking for SPX to test my main resistance zone in the 2020 area before that correction, but depending on the way the Ukraine cards fall, SPX might not get there.

For the very short term the trading day before a holiday weekend tends to lean bullish, and the first trading day of September on Tuesday has been up 12 of the last 18. I am cautiously looking for new SPX all time highs both today and on Tuesday.

Thursday, 28 August 2014

Retracement Targets

SPX traded sideways yesterday in what looked quite a lot like a bull flag, but has broken down overnight. It seems very likely that an overdue retracement has started, though we might still retest the current high to form a small double top. The main fib retracement targets are the 23.6% fib retrace at 1990, the 38.2% fib retrace at 1980, and the 50% retrace at 1973. The 50 hour MA is at 1992 and might hold for the 23.6% option. Rising wedge support has already broken, so that is no longer support. SPX 60min chart:
I'm leaning towards either of the 1980 or 1973 targets ideally, as this would (on my primary scenario) be setting up a topping pattern for a last new high. I have main support at 1956 at rising wedge support from the January low and the 50 DMA, but if SPX gets that far then a stronger high than I was expecting would already most likely be in. SPX daily chart:
I'm watching the Dow, NYA and RUT charts for hits of the support trendlines on those charts from the last low. Dow is a decent example of the distance yet to be covered from the close yesterday. The best fit on SPX would most likely be the 1980 target. Dow 60min chart:
Oil has been rallying a bit and I think we may see a retest of broken triangle support in the 96.5 entry. I don't think that a significant low is in so if we see that retest, that should be a short entry. WTIC daily chart:
I'll be looking for the retracement pattern today and will post it on twitter when I have identified it. I'm looking at this as a retracement to buy before another (probably last) push up into a significant high.