Weekly Market Analyses (WMA) for 12 April – 16 April 2010

TIPS
Weekly divergence correcting seems like it is about to end after this week’s spike down and rally like mad up. Daily downtrend spiked down on Monday out of the channel and mid-week registered a rally up. TIPS look bullish in the short term , but if it fails to make a HH on the daily, and drops below the support at 103.38, that’s confirmation of a trigger for a trend change bias. Since January, TIPS has trended downwards, divergent from the S&P500. As a leading indicator, this is telling of an impending correction/trend reversal.

JNK
Weekly divergence mildly corrected and may need to register a very much mild MACDH which can happen in the next two weeks. The RSI and STO are unlikely to make a higher high (HH) and that is where the turn would be. Daily cracked early in the week, and then developed a bullish stance, albeit very short term. Moving forward, expect that the MACDH to register positive bars over next week, to complete a bearish divergence turning around 40-40.5.

DBB / /HG
Base metals is continuing its stunt… The weekly divergence is continuing its build up. The daily shows overbought build up in an obvious divergence that is correcting. Last week, the copper rally stalled and retraced midweek. Copper is now bearish for this week

The above covers the three main leading indicators as outlined by Russell Napier. According to his indicators, we are in for a yet another early bullish week. All last week, economic data was shrugged off indicating remaining bullishness in the general markets. With copper weakening, and TIP and JNK about to turnaround, the turning is around the corner.

/DX
The weekly USD futures chart are showing signs of a correction in the USD, which is likely to propel markets up further. This comes in line with some soothing news about Greece, strengthening the Euro a little. All these lok temporary. The daily chart on the other hand is showing a potential HH-HL-LH-LL-LH-LL pattern and the indicators are showing USD weakness this week. Breaking 80.80 would be bad for the USD.

SPX / S&P500
Accentuating what I wrote last week: “It is really interesting how the picture looks… the weekly STO show an overbought situation with the MACDH pointing to a huge divergence. While undeniable that the market is heading up, it is a maniac patient in the daily charts, which again are smacking me in the face with bearish divergences. Going into a very seasonally bullish April, this return to mean would be really interesting. Again, the charts tell me that this week would be rather bullish, and end-April onwards, may come the day that the music dies. This market is on Prozac, and watch of the withdrawal reactions!”
Early next week should be bullish and mid-late next week should see a retracement of a decent proportion…

 
/GC / Gold
Indeed it was a bullish week for Gold. Still looks like it will continue.


/CL / Crude
Weekly charts show long term technical weakness with about one more week of exuberance. Am still expecting it to happen at the end of April, after the seasonal burn out and the realities of the markets come back.

 
VIX / VXX
Weekly VIX charts are showing signs of strength at a 3 year support at 16. The daily VIX are about to complete the last pop down mid next week. And there is divergence or at least HLs on the RSI and STO indicators. The VXX (VIX ETF) is almost completing a 9-13-9 pattern, leaving this week to perfect the pattern. Confluence is reached as the BOTH daily and weekly charts are to complete the patterns THIS week.

From the above scan, I am expecting a highly probable turnaround this week, with earnings season touted to be the driver… it could be a driver for the bear. There should be a nice spike up, a fakeout if I may say so. The USD should fall early in the week only to pick up later, with TIPS and JNK turning around midweek, as well as the VIX. Commodities appear likely to do so as well, with some counter conventional relationship moves, especially where gold is concerned.

The MadScientist

PS. The DJ briefly broke over 11,000 on Friday late night, and now it is news... I expect this to be a fakeout rather than a breakout.

Note: Do note that 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.