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Friday, 1 August 2014

Murphy's Law

I've been having a great holiday with lovely scenery and weather. There is only a slight pall on the week that it has been one of the most interesting weeks of the year, and that I called all the key levels on Monday morning, so I would have had a really very nice week had I been working. That's life I guess.

On SPX the break below double top support yesterday morning targets the 1914 area, close to the weekly middle band at 1912, and the 100 DMA at 1911. That area should be strong support. The strong support I mentioned on Monday under the double top support level was rising wedge support from 1737, but SPX broke back below broken rising wedge resistance and then broke and closed below rising wedge support. Rising wedge support is now therefore broken.

That was a very significant support level and it's worth mentioning that the upside targets that I had given on the basis that the wedge might be breaking up are now invalidated. It is still just possible that this wedge could break up, but that would be rare, and it is now a reasonable assumption that this wedge is breaking down.    

The short term options here are either that SPX proceeds directly to the double top target in the 1914 area, and most likely starts a decent bounce from near there, or that we see a two to four day bounce start from the current low at the possible H&S neckline at 1925. In the event that we see the bounce from 1925 the ideal rally target would be a test of broken double top support in the 1952 area, and on a subsequent break below 1925 the H&S target would be in the 1859 area. SPX daily chart:
NDX is suggesting further downside here. The first level of support I gave on Monday was the low yesterday and broke at the open this morning. The next target is rising megaphone support in the 3850 area or the possible H&S neckline just below at 3837. That said there is some positive divergence on the 60min RSI, and we could well see a bounce to match a possible right shoulder bounce on SPX from 1925 before turning back down. NDX 60min chart:
The break below wedge support on SPX yesterday was a very significant support break, and suggests strongly that we will see at least some more downside. If we reach the double top target in the 1914 area before a rally then that rally could retest the current highs. If the bounce starts from the current low at 1925 then it would most likely peter out in the 1952 area and set up the next big leg down.

Normal daily posts will resume on Monday morning.

Monday, 28 July 2014

Other Markets Update

This is my vacation post for other (non-equities) markets. For equities check my last post from earlier today. Normal service resumes next Monday 4th August.

Last time I was looking at EURUSD I said that I was expecting a test of rising wedge support in the 1.35 area. EURUSD made that and then slightly lower to test the 200 DMA, so the rising wedge is now broken. Unless we see a fairly fast recovery to new highs I'm now looking at targets for EURUSD in the mid-120s. I've been watching this setup for months in the expectation that there should be a strong USD rally at the end of QE3 so I'm expecting this to resolve down. EURUSD weekly chart:
I've had a look at my May projection for TLT and have adjusted that for the rising channel that has since been established. The obvious next target is channel resistance in the 117.5 to 119 area, depending on the time taken to reach that rising trendline. TLT daily chart:
Oil has retreated sharply recently and may retrace a bit further. Overall though I have USO in a rising channel from the 2012 low, and my overall bias remains bullish, with the obvious bigger picture target at the 2012 high at serious resistance just over 42. I have a possible retracement target in the 35.5-36 area, which should match up with CL support in the 97/8 area. USO daily chart:
The overall picture on silver looks bullish, with a possible double-bottom forming and declining resistance from the 2011 high broken. Short term though the RSI setup is bearish and silver is currently making lower highs and lows. The next obvious target is under 18.61 and may retest broken declining resistance from the 2011 high in that area. Silver daily chart:
I'm on vacation with a laptop, a lousy internet connection, glorious scenery and beautiful weather for the rest of the week, so I may not post much more before normal daily posts resume on Monday 4th August.