Category Archives: Interest

Other Markets Update

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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:

140728 EURUSD Weekly Rising Wedge and Triangle

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Dial M for Murder

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There was an interesting comment made to me yesterday that the shooting down of the Malaysian Airlines flight over Ukraine helped the bears considerably, and that’s true, up to a point. It is something I have noticed regularly before at big inflection points, and it’s obviously not the case that the patterns can somehow see into the future. I think there is a relationship there but logically it must be that if there is a strong bear setup like this, then the right news trigger will set the ball rolling with an apparent reaction to the news that is disproportionately larger than the reaction you might see to similar news at other times. We’ve all seen the markets shrug off bad news many times before, but when there are decent bear setups in play the market is showing a willingness to reverse that any bad news can then set strongly in motion.

Obviously the investigation into the extent that Moscow was responsible for this very avoidable tragedy is just getting started, and we may well see more geopolitical shockwaves from this in current days, though it’s important to keep this in proportion. No war is likely to start due to this tragedy, and it’s even possible that it may act as a catalyst to end the current Russian insurgency in Ukraine. (more…)

Some Candles Are Just Too Rare

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That was a very rare daily candle yesterday, not visible on SPX, because for some reason the SPX data feed doesn’t seem to notice gaps much for reasons I have tried and failed to establish in the past, but on SPY, which is what I use when I want a true picture of the daily candle. The candle for the day was a strong gap down through the daily middle band, with a recovery back above it, and I was only able to find three comparable candles going back to 1991.

In those three instances two traded intraday below the middle band the next day and both closed red for the day, with one closing significantly below the middle band. The other example rose modestly the next day. What was interesting though was what happened afterwards, which was that in all three instances SPX then rose to touch the upper band on SPY (a little short in two instances on SPX), and then immediately retraced back to the lower band. That was very interesting though a total sample size of three is very small and yesterday’s gap under the middle band was the deepest of them all so even those three aren’t necessarily fully comparable. . (more…)

The Day Before

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I don’t know how long it will last, but yesterday was recognisably the second day of a band ride on the SPX daily upper band. ES looks as though SPX should open near the upper band,so whichever way it goes, this should be a third day for that band ride. There may be no more than that as quite a few band rides fail after the third day. If SPX has a strong day then I’d expect the upper band to close in the 1981-3 range today. SPX daily chart:

140703 SPX Daily Rising Wedge Mas BBs

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Q3 Day 1 – Bullish

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The first trading day of the third quarter is historically bullish. The Stock Trader’s Almanac has this as down as 76.2% bullish on Dow and 81% bullish on SPX. Looking back over the last ten years the points to note are:

- Eight green closes and two red closes
- The two red closes were -3 (2010) and -12 (2004)
- The eight green closes were +3, +3, +4, +5, +8, +10, +16, +19
- The second day of Q3 leans bearish

I’m leaning bullish today and looking for a retest of the 1968 SPX high from last week. If strong primary resistance overhead is respected there is still headroom to run up as high as the SPX daily upper band, currently at 1972. SPX daily chart: (more…)