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Monday, 17 September 2012
Cargo Cult Economics
There's actually not a huge amount that's interesting on the charts for today, and I'm in a slightly whimsical mood, so I'll show the equities and TLT charts for today and move on to some more interesting charts that I think are worth a look. On the SPX daily chart SPX opened and closed above the upper bollinger band on Friday and hit the probable rising channel resistance that I was looking at as resistance on Friday morning. So far we are seeing reversal there, and as long as that holds, we may well now see a significant retracement that would target channel support, currently at 1400 and rising. There are obvious support levels at 1440 and 1420 (descending triangle top) and I would expect one or the other to be close to such a retracement low:
I wrote a weekend post at MarketShadows that you can see here. Some interesting charts there of SPX, Nikkei and Gold, but the message was that new highs for SPX and gold look very likely from here now, that dips should be bought, and that a dip worth buying may well be starting now. If that plays out as I'm expecting, then we will most likely see that bottom out on SPX either at a retest of the 1440 area pivot, or at the top of the descending triangle in the 1420 area, as Bulkowski notes that these tend to turn into strong support levels. I think that retracement has started from the highs on Friday, though I wouldn't rule out a test of those highs to make a short term double-top.