- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
- CHARTISTS MUST PUT ALL BIAS ASIDE AND LET THE CHARTS DO THE TALKING OR WE'LL SEE ONLY WHAT WE WANT TO SEE
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Tuesday, 11 January 2011

Never Ending Story

My feeling is that the top is probably in on copper and precious metals. I'm much less convinced that the same is the case on equities. ES has broken up through declining resistance from the recent high this morning, and that is adding to my feeling that equities aren't done yet. I've been expecting a hit of the upper trendline of my ES rising wedge on the daily chart, and unless we see ES 1250 broken then I'm still expecting to see that. That target trendline is rising as we chop around here and if we were to hit it today it would be just under 1290 ES:
We are seeing signs that a top is near though. I haven't posted the gold:silver daily chart in a while as it has been in a steep decline since August, with the ratio dropping by a third in that time. There has been a very clear resistance trendline for that move though, and that trendline has now been broken. That suggests that a major interim top may well be near:
In terms of a commodities top the commodity currencies that I watch, mainly AUDUSD and CADUSD have remained strong while USD has been rallying. There are serious cracks appearing in AUDUSD now however, with the support trendline from June now breaking. If that is broken with confidence then I would expect AUDUSD to fall towards longer term support in the 90 area:
I'm watching the falling wedge on copper this morning to see whether it will hold today. It may well not, as the equivalent falling wedge on oil is already breaking up. I'm not expecting a new high on copper or oil, but they could yet broaden out into declining channels or make double tops. If it breaks up I'll be expecting a further move up of some kind while equities make a new high:
One chart that really struck me as interesting as I was going through charts this morning was the chart for the Baltic Dry Index. I've drawn a very nice fan on the $BDI chart and on a break up that would look very likely to lead to a significant further move up. The chart looks very weak though and BDI is still some 87.5% below the peak in 2008. That might be due to a glut in shipping ordered near the top of the last bubble but it is very interesting regardless that it has been quite so weak:
 
Sadly there is no BDI ETF. Does anyone know a decent way to trade the Baltic Dry Index?

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