- 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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Monday, 27 June 2011

Uncertain Bounce

I mentioned that the stats for last week on the Dow were really bad on Monday last week and sure enough the Dow closed down after that wild week of reversals. We may have seen a low now but my confidence in that is low as other equity-related markets are visibly crumbling. Oil had already broken support and silver broke support too on Friday. Here that is on the SLV daily chart:
UUP pinocchioed through falling wedge resistance again on Friday, adding to the impression that USD is about to break up seriously:
Short term though, EURUSD broke up from a falling wedge this morning with  target at 1.43.
So where now with equities? The situation is ambiguous here to say the least and that ambiguity is perhaps best expressed in my SPX 60min chart, where you can see a decent quality declining channel, the neckline of a possible large H&S, and a falling wedge (that may have developed into the declining channel) where the move down on Friday retested the broken wedge resistance trendline. The most obvious direction from here is still up I think, and a break above declining channel resistance in the 1290 SPX area would confirm that, but a break of support in the 1258 area would indicate down to the 1240s level for declining channel support:
There was some decent positive divergence on ES and NQ at the overnight lows. Together with the EURUSD bounce that might well deliver a decent bounce on equities today. I have a possible rising channel developing on NQ which I'll be watching with interest today. I've pretty much written off the IHS as the last low went lower than the right shoulder:
There was no positive divergence needed on TF as there was no test of the last low. NQ was weakest and went lower than the last low, ES tested it exactly and TF bottomed well above. The rectangle on TF could potentially still play out, though there's some declining resistance in the 804.2 area:
I don't think we're down with downside yet, and if we see a strong bounce here then I would see that as a counter-trend bounce. I'm losing conviction that we'll see that strong bounce and if UUP breaks up then I suspect that we won't. MasterTheGap are suggesting that there are good odds to closing any opening gap today.

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