Daily Archives: September 17, 2010

Bullish Breaks (by Springheel Jack)

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Resistance broke at the ES IHS neckline overnight which was very bullish, though it remains to be seen whether we now run up quite a way further or fall back before the neckline is also broken during trading hours. There has been a lot of talk about SPX being overbought here. That's true on a short term basis but we're not yet overbought on the daily RSI of course:

100917_ES_Daily_IHS

There is still some chance that resistance might hold short term in the ESZ0 1132 – 1135 area today. I have a resistance trendline from 1075 on the 15min chart that has been tested four times previously and held. It has been tested hard in the last couple of hours but has held so far. If that ES resistance trendline breaks I'll be considering resistance levels in the 1145 to 1175 area:

100917_ES_15min_Resistance_Test

On 30 year treasuries the rising channel has now definitely broken down, which adds to the bullish picture on equities:

100917_30Yr_TREAS_-_Daily_Rising_Channel_Broken

EURUSD and GBPUSD made significant gains overnight but I won't repost the charts today as I've little to add to yesterday's comments. CADUSD broke resistance at 97.6 and the next obvious target is the rectangle top at 98.65:

100917_CADUSD_Daily_Rectangle

The Yen is looking interesting for a change here. I don't normally chart JPYUSD as it doesn't tend to hold trendlines well but a major resistance area is being tested and we could be seeing an IHS form:

100917_USDJPY_60min_Possible_IHS_Forming

Looking at the USD currency pairs I'm definitely thinking that the next obvious support for USD is at 80 as I posted yesterday, and if we are seeing a move there at the moment then ES / SPX could definitely run higher. I'll be watching resistance on my ES 15min chart but if it breaks, then I'm not seeing any obvious reversal level below 1150 SPX really.

What's worth noting at the moment though is that we don't yet have a break of the IHS neckline on the SPX daily chart. If we see a reversal below it before the market opens then there is still a significant chance of a short term reversal here. We are most definitely short term overbought. If we gap up above the neckline at the open though I'll be expecting to see a further run up in the next day or two.

There are a couple of external factors to note here. Firstly it is quadruple witching opex today, and the market often trades in a narrow range on such days. Statistically that does also leave us with a traditionally bearish week next week though all eyes will be on the Fed next Tuesday, when they will either announce the heavily trailed new QE push, which would be bullish for equities, or they won't announce one, which at this stage would disappoint a awful lot of people.

Another Analog (by Nathaniel Goodwin)

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After reading some great posts on the thoughts of Serge and Pug Thursday, I thought I would throw this analog out there. This one has been in the back of my head for a few months, and is one reason I’ve tried to lighten up a bit on the bearish side. I am not trading off of this or any other analog, just keeping it in the back of my head along with all the others.
 
If this panned out, it would be  like a strung out version of the 1960’s. The pattern we are currently in could take a few years longer than it did in the 60’s. Elliott Wave wise; this is sort of like what I think Pug is projecting. ((We could also be in an X wave right now from the 666 low after a big A-B-C from 2000-2009, and possibly break the 2008 high to conclude the X wave. What could follow is another mess of A-B-C crash-rally-crash (or just painful sideways motion) that could last until 2020-2025)).

 

I believe that Prechter’s P3 then P4 and P5 is actually the quickest and easiest way this whole mess could end up in terms of EWT; unless the A-B-C from 2000-2009 ended the correction, and we are now in a new bull market. To be honest, I think there are better ways for me to spend my time honing my trading skills than worrying about EWT long term. No matter what happens, EWT will find a way to be correct in the end!


  SPX1960s
 
Here is a fun-fact, mom says I was actually conceived sometime in March of 1974, and was born on 10/04/1974, which was the day that awesome bear died.

One theory I have is that  I may need to impregnate a willing female sloper, which could possibly start the beginning of the next and final big sell off. When the slope-love-child is born, we should all probably dump our shorts and go very long for the remainder of our lives.

If any slope-babes between the age of 21 and 52 are interested in the creation of my spawn, please leave your contact information in the comments section below. This offer is also valid for Bloomberg’s Deidre Bolton and CNBC’s Amanda Drury.