Tuesday, June 7, 2011

Topped out - WMA 7 June 2011

TIP weekly chart is ranging and the rally in previous weeks had stalled. The daily TIP chart is had a SELL signal late last week but has been ranging since. Technicals are weakening and should show its true colours by the end of this week. Bearish inclinations observed.

JNK weekly chart had clearly broken the uptrendline last week and this week continues to remain weak. The daily JNK chart is showing a lot of dumping of coporate bonds particularly over the last two trading days, sending JNK into a deep oversold position. It would be due for a technical bounce over the next few days and should continue its downtrend again by mid next week.

Copper futures show struggling bounces to lower prices, but just barely. Admittedly, the metal price has been rather resistant to a correction. For now, it looks like battlezones have been drawn and that is where price is.

From Napier’s leading indicators of the equity markets, 2 out of 3 are looking weak and bearish. Over the next week or two, the equity markets should be heading lower despite a relief rally of sorts over this mid-week.

The USD in recent weeks made an effort to rally significantly and then hit the final of three resistance levels and reversed back down. The USD futures daily chart has a lot more downside to go to confirm a resumption of the downtrend and for now, it looks set to form a higher low which should be done by midweek.

The weekly S&P500 E-mini futures chart had a Sell signal two weeks ago and broke out of a short term channel at the same time. The daily chart shows the testing of the channel and a failure to break in again, which was followed obviously by bearish indicators. The last week saw the USD futures/index lowering together with a lowering S&P500. This asynchrony is about to end soon and the true colours of the new trend would be revealed. A rising USD would push the equity markets further down, and the SP500 is well underway into a bearish turnaround (MACD, RSI and Stochastics have all crossed into bearish territory).

The crude futures are in a range that appeared to break out briefly and returned into range. Typically, when that happens, it usually works its way down to the other side… Whether this happens or not will depend on many factors, economic, geopolitical and so forth. This needs more time to be revealed.

The Gold weekly and daily charts look bullish to me. How that works out with a rising USD puzzles me at this point, although it has had happened before. It looks like a matching top is being attempted as the technicals appear dubious in an intuitive way.

The MadScientist - 7 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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