- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Wednesday, 23 March 2011

Make or Break

I have mixed feelings about the current level on SPX particularly. I think that the low is probably in, but there's no doubt that if this move up is going to fail, this is the likely place for it to fail. SPX has been trading slightly below the 20 and 50 SMAs this week, and they have just crossed bearishly, with the SPX daily 50 SMA at 1303.75 and the 20 SMA at 1302.95. The key target short term is for SPX to recapture those levels and close above them:
I haven't mentioned the 50 SMA on NDX as that is still well above 2300, and that's because NDX tends to lead on both the way up and the way down. It is still looking slightly weaker than SPX this week, which is weakly bearish. Copper has finished forming the right shoulder on the forming IHS and has broken the neckline to reach 440. That looks unequivocally bullish, and I'm now watching declining resistance in the 445 area and the resistance level in the 455 area. The IHS target is 468:
I have short term trendlines on SPX and NDX that I'm watching for directional clues, and I'll be watching to see how they perform today. Hard to tell at the time of writing whether the indices will open up or down, as overnight trading has been rather volatile. Here's the 15min SPX chart:
Here's the 15min NDX chart:
There's been a lot of talk the last few days about the US dollar breaking longer term support. I have mixed feelings about that to, as it has broken down from a symmetrical triangle, and they are treacherous patterns, frequently breaking out one way before playing out in the other direction. Nonetheless it is worth noting that the technical target for this broken triangle on USD is in the 55 area, and that I do have a couple of trendlines supporting a break well below 70. Against that it was pointed out to me yesterday that the USD weekly chart is still showing some positive RSI divergence, though that is only significant in the event USD reverses soon of course. It's also worth remembering that QE2 is scheduled to finish at the end of June, and that there are no current plans for QE3, so US money printing on a huge scale is due to finish soon. Here's the setup on the weekly USD chart for what it's worth:
I'm leaning very cautiously bullish today, mainly on the strength of the break up on copper.

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