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OK, I've finally found the time and energy to put a post together.
We now know that everyone on the planet is following The Triangle. Even the Wall Street Journal – – hardly the bastion of technical analysis – featured this story earlier today:
It's interesting to see that the Street's take on the chart is that it's "super-bullish". It sort of reminds me of how we bears were beside ourselves with excitement last August when the giant head and shoulders had formed and a "super-bearish" plunge seemed to be right at hand.
One interesting trade I saw mentioned was long United States/short everywhere else, best expressed with the ratio chart shown below. It has performed awfully well the past couple of years.
Apple is taking a breather after a recovery rally of $12.75, or 3.4%, from Tuesday morning into early trading today. As viewed on our intraday point-and-figure chart, any weakness off of this morning's high should be considered an intervening pullback prior to the resumption of strength that propels AAPL to 398-402 thereafter. Optimal pullback re-entry window is 385-383, with downside overshoot potential into the 381.50 area, ahead of the anticipated next up-leg.
OK, I confess, this market is doing a breathtaking job of sapping my spirit away. Quite incredible, really. I guess as far as psychological torture goes, the "triangle" is a great way to go. Just to amp it up, having a triangle within another triangle is an even more effective method. Good job, Mr. Market. I am losing my mind, day to day.
Having said that, I'm going to be a lazy slob and just show you the ETFs I am finding most interesting right now. I went through my whole list, and these are the most technically "friendly" charts, in my opinion:
I'm actually only in one of these, which is USO. I had been avoiding crude oil, but after this morning's big pop, I thought a smallish short position was warranted. I've got a stop at 39.77 with an entry at 39.27
I've been reading a lot that the direction in which the symmetrical triangles break should be respected, and that's true up to a point, though in my experience these triangles have a nasty habit of overshooting on the last wave and then playing out in the opposite direction, and that's worth bearing in mind.
Until they break the market is in limbo, though I'll pass the time while we're waiting with a few observations further down on the relationship between equities and USD.
First the equity charts, which look much the same as yesterday. Support and resistance on the ES and TF triangles have moved slightly of course and on ES they are now in the 1230 and 1266 areas respectively:
On TF triangle support and resistance are now in the 713 and 745 areas respectively:
On NQ we may now have a small rising channel in play within the overall consolidation range. Channel support and resistance are in the 2320 and 2380 areas respectively and the 60min RSI was showing negative divergence at the high yesterday, suggesting that we might see a move lower today towards 2320:
Oil is still holding the rising channel, and I've marked a small rising channel within that channel to show the tightness of the recent moves up. This hugging of the overall rising channel suggests that we might see a break down soon and oil is clearly struggling to break over resistance at 100:
I haven't posted a silver chart in a while, and that's still within the overall declining channel that I posted at the September lows. There's a possible rising wedge forming but the main things to watch are the strong support trendline for the current move, which needs to remain unbroken for the uptrend to continue, and the small declining resistance trendline from the last high, which needs to be broken soon on the same basis:
The main thing I wanted to look at today though was USD, and I've charted that up on the DX chart, which is looking interesting and fairly strongly bullish. I've marked up the IHS there, which has been somewhat weakened by DX moving back under the neckline after it broke up, but the main thing to note is the decent rising support trendline, which should give a clear signal when the current move wave up breaks down. There's also a possible rising wedge forming on the chart.
Something I've noted in the past is that while waves up and down on USD sometimes decouple, and sometimes can decouple for quite a while, as we saw in the November 2009 to April 2010 period for instance, there is still some correlation remaining. When equities and USD are both in uptrends as they were then, and very possibly are now, there was a characteristic way in which they would move during the short term waves up and down on USD.
What I was seeing and posting about then in early 2010, was the way in which during waves down on USD, within the larger uptrend, equities would move upwards very strongly, and then while USD was retracing, equities would trade sideways. How does that compare to what we are seeing now? Well USD retraced strongly from a high in early October to a low in late October, and while that happened equities moved up very strongly. USD then made a retracement low in late October and started another strong move up, since when equities have traded sideways, forming the symmetrical triangles or pennants that we are seeing form at the moment. That is suggesting to me that as and when this current wave up on USD finishes, we may well see another strong move up on equities as it then retraces. Hard to say when this wave up on USD might end of course, but I'll be watching that support trendline:
Short term the obvious next move on DX is a bit higher to touch the upper trendline on what may be a rising wedge forming, and I'd like to see that happen to confirm the rising wedge, or to break higher and possibly form a rising channel. EURUSD and GBPUSD are both consolidating and trying to bounce a bit with some positive divergence on the 60min RSI though, and we might therefore see USD retrace a bit sooner. Here's how that looks on GBPUSD:
Meanwhile we are just moving sideways on equities within the triangles, and it's hard to say what might happen today. I'd like to see a move up on USD with equities moving down to touch the lower trendlines of the triangles on ES and TF. We'll see how that goes.