DMA Week of 8 to 14 August 2010

DMA Week of 8 to 14 August 2010

JNK
The Coporate junk bonds (JNK and LQD) weekly charts indicate a continuation of the uptrend. However, the JNK daily chart is showing overbought signals and has already started to retrace. LQD apparently is popping up nicely.
 
TIP
The weekly TIP chart confirms a steady uptrend and has just broken out of a significant resistance at 106.60. Maintaining this for another two weeks would seal the confirmation of a breakout, alternatively, a decisive breakdown would send it much lower. Nonetheless, there is about another 7 weeks of bullishness left in TIP. The daily chart is also bullish and should breakout to the upside within the week. Failure to do so would send it tumbling rather hard. From the indicators, the probability is to the upside.

/HG
The copper weekly chart momentum appears have stalled, but it should have a pop over the next 2 weeks. The daily chart has a bearish divergence, very overbought and has started to retrace.


With Napier’s leading indicators, the outlook is bullish and has been so over the last 2 weeks (during my absence!). While being bullish, the indicators (and thus the equity market) are overbought, hinting of an imminent retracement.


SPX/SPY
The weekly chart for the SPY shows that there is a short term bull rally in place. It should be lasting another 6 weeks into middle of September. This rally is likely to reach about 1180-1200. The daily chart show a slightly overbought index on low volume, which is likely to push futher and then correct in an increasing volatility style. 1150 is a level that the SPX (115 on the SPY) has to break and maintain above. This week is likely to be mostly bearish.

/DX
The USD futures show a very interesting technical situation. The weekly chart look really bearish only for about another 2 weeks bringing the steep drop in USD much further. However, the daily USD futures are very oversold, with a bullish divergence about to break the bear’s back. The Open Interest is also indicating that the USD is bound for a rally which is indicative to be already on.

/CL
Crude weekly chart is bullish and has a good way to go. The daily chart however is overbought although there is a lack of bearish divergence. This is a good sign for crude to continue its rally but not before a retracement especially if there is a technical rally in the USD.


/GC
Gold has a very strong uptrend that has tested the rising trendline 3 times already on the weekly charts. Although it appears to me that Gold can and probably will move further up to test the previous high, it is forming a bearish divergence in the longer run. The daily Gold futures has had a bullish divergence that is equilibrating just now with a little more gusto, especially after bouncing off the trendline.

It is intersting for Wave counters to note Gold as it appears that Gold has completed 5 waves so far and may be consolidating in the interim.


/YI
Silver weekly chart has stalled in its rally and is forming a range. The daily chart had a bullish divergence over the last couple of weeks and has since equilibrated. It is unclear to me if Silver is up to anything except ranging.


US Sector Scans

XBI (SPDR Biotech), XLP (Materials), XLY (Discretionary), XLE, XOP (O&G Exploration), FRI (REIT), IYT
looks bullish on weekly and starting to be overbough in daily although there is more to go.

XLP, XLF (Financial), XLU (Utilities), BJK (Gaming)
Similar to above, except that retracement from overbought is already in place.

XLV(Healthcare), XME (Metal & mining), XES (Oil and Gas Equip), XPH (Pharma), XRT (Retail), XLK, IXN (IT), ITA, PBE (Biotech)
Similar to top, but laggard.

PBJ (F&B)
Bearish divergence on weekly, and ranging on daily.


In summary, looks like retracement week is in place!

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.