Saturday, June 18, 2011

Anticipating another dead cat bounce - WMA 19 June 2011

The weekly and daily TIP bonds appear to be in a range with all indicators weakening. Breaking out of 112 or breakdown of 110 would be indicative of the next move.

The weekly chart looks bearish, however, the past week saw massive selling on Thursday but was abruptly recovered on Friday. This placed JNK just above support after a day of heavy selling. A bounce in JNK is in place and it would be important to look for clues to its intended direction over the next two weeks.

Copper futures are in a weak uptrending channel with contradicting indicators. This put prices in a range but the daily chart appears more decisive as it appears to be bouncing off the Fibonacci Fan support.

According to the Napier’s leading indicators, it seems that the equity markets are somewhat indecisive, and a short term relief rally should still be expected in the mean time.

The S&P500 futures had been showing a trend change and the past week confirmed that it has in the short term, a trend change. The bearish divergence on the weekly has played out and is in the process of a major correction. This volatile week ended with a doji and it appears that the next two weeks may be range bound. While other indicators are showing a weakening backdrop, the Force Index is suggesting that a relief rally should be in place for the next week or so. The daily chart clocked the dead cat bounce on Tuesday, and keeled over last Wednesday. The Force Index is hinting of another bounce from a oversold condition. This is likely to bring the ES to the channel resistance at about 1285.

The USD futures weekly chart looks to be forming a bottom and a higher low was registered recently. The daily chart shows that a break and test of the 50 MA is in process and the outcome of this should give a clearer indication of where equity and commodity markets would be moving in weeks to come. There is still a bullish undertone to the USD and expect a very possible multi month rally for the USD.

Crude weekly chart looks bearish and a support of 85 looks likely. The daily chart shows that Crude got hammered over the past week, and may be due for a bounce to about 97 before continuing its way down to 85 at some point.

Gold weekly futures chart show a very long rally. The daily reveals the age of the rally where a range is keeping prices between 1480 and 1550. It appears to have bounced off the uptrending channel mid-support. A possible bullish factor.

The MadScientist 19 June 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.

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