Saturday, June 11, 2011

Dead cat to bounce - WMA 12 June 2011

TIP has been trending within an uptrending channel for the past two years. It broke down of the channel to find the lower support and just tested the uptrend support-turned resistance. The resistance proved to be strong for the past weeks and the daily chart has Sell signals with weakened indicators. The RSI, Stochastics and Force Index are in bearish zone and the MACD is likely to follow through soon. TIP looks bearish now at 110, and has support at about 108.

JNK has been raning in weeks and closed below the immediate support, only to find another support line. The daily chart shows a steep sell-off in JNK on Friday This steep sell-off has placed JNK in deep oversold territory and is due for a pullback. Bearish overall, with technical rally soon.
JNK daily underscores the hordes of selling in the background of the market. Corporate bonds are where money for the companies lie, and according to Napier, it is a source and leading indicator of the market. This heavy selling is seriously telling something, even for the weekly chart. The Setup is way out into depression that a bounce is due over the next few trading days. Thereafter, it should continue the weekly trend. Watch this one!

Copper is not looking good on weekly nor daily. The weekly chart shows a correction in place, and the daily chart has bearish inclinations just as it is reaching a Fibonacci Fan support. It looks likely that a break of this support may happen and if so, it has a pretty long way down.

According to Napier’s leading indicators of the equity markets, they are either bearish or bearishly inclined. This is likely to be where the bears take over.

As reflected by the leading indicators, the S&P500 (and the ES futures) have reacted to the latest spate of bad economic news and a 6 week sell-off has been in place. The weekly chart has indicators all indicating a change of trend and the RSI and Force Index are in bearish territory. The daily chart is downtrending in a channel and just broke down the downtrending channel support. The indicators are very bearish, but a deep oversold condition has arisen. Bearish with a dead cat bounce due.

The USD futures had been way oversold and has bounced once again. Both the weekly and daily charts are showing a convincing rally and is likely to signal a trend change. Fundamentally, this may coincide with the end of QE2, and it remains to be seen if that is true.

Gold has had a beautiful rally over the past two years, and it looks as if it is about to end temporarily. The May correction in Gold followed by resumption of a rally did not look convincing and with the USD attempting a recovery, Gold may be in for a good correction. The Daily Gold chart has failed to make a higher high and looks unlikely to be doing so.

Crude has had a volatile ride in recent months. After rallying strongly due to the Middle East issues, it dropped to erase 50% of that gain in a week. Thereafter, crude has been ranging about 100 for the past month. Coincidently, or not, crude has been trekking along a Fibonacci Fan support line but has not broken the support although indicators are weakening. With a rally in the USD, it would be difficult to maintain its uptrend for and is expected to fall as well in coming weeks.

Silver sutures just go to show that it is going down…

The MadScientist - 12 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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