Weekend Wiggles

By -

The way I feel about the market tends to drive what kind of charts I share. When I'm feeling the confident the market is heading a certain direction (which is usually, let's face it, down), I zoom in on individual positions, sometimes to the exclusion of indexes. At other times, like, oh, right about now, I focus on the big picutre.

There's no doubt that the market action recently has nailed a couple of more pegs into the bear coffin that has been successfully under construction since November 2008 (the widely-recognized nadir was March 2009, but an important reversal started four months prior). The Dow Composite, shown below, has pierced a couple of important resistance levels. This is not good news for ursine sorts like myself.

Picture 1

Most charts, however, still hold out a candle of hope for the bears, although none of them are exactly jumping up and down with weakness. The NASDAQ Composite remains safely below major resistance, even though it is doing so while thrusting higher. Paradoxically, AAPL has become just about the only friend tha the bears have left. It is tamping down any strength in NASDAQ-land.

Picture 2

The Russell 2000 has been on a ridiculous tear for the past fourteen months, approaching a 40% gain in that time. As with the Dow Composite, there is some major damage here in the form of a bullish breakout.

Picture 3

For each of the three trading days that has transpired in 2013, the high for the S&P has mashed right up against resistance; it has shown no signs of abating this line-mashing exercise, having exploded higher from the last gasp of weakness on December 30.

Picture 4

One creature I barely understand is the VIX. Our friends over at ZH chime in every day with tales of how Kevin Henry from the Fed is crushing the VIX. I don't quite understand the motivation for the Fed really giving a crap, but perhaps I'm misinterpreting Tyler. In any event, the volatility index has been completely squished over the past year to about a third of its prior peak.

Picture 5

During the week ahead, the EUR/USD will probably decide whether we get our first taste of 2013 weakness in stocks or not. Looking at the daily chart, the Euro is positioned for a nice bounce off its supporting trendline.

Picture 6

Looking much closer however, you can see that a rise in the Euro might simply be a setup for a subsequent plunge with another strength to cut through the aforementioned support level. I'm expecting a lift to 1.316 or so and then a reversal which will make the ascending trendline moot within the next week or two.

Picture 7

That's it for me for now; I've enjoyed my little vacation, which draws to a close with a flight home late Monday, but I'm looking forward to having my eight computer monitors back early on Tuesday morning. Have a good rest of the weekend.