- 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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Wednesday, 30 January 2013

A Look at Bonds

One thing that is characteristic of strong trends is that you can see nice bear setups repeatedly trashed while the index keeps on pushing up. That was the case yesterday when ES pushed back over the 50 hour MA and just kept on going. The 50 HMA is now at 1499 and is now support again. There is a short term double top and negative 60min RSI divergence with a target in the 1499.5 area so I'm expecting to at least see that level tested early today. If we see more downside after that, strong support has now been established at 1491:
EURUSD broke above the 1.35 area resistance level yesterday. Unless we see a strong reversal soon, the obvious main target is in the 1.42 area:
CL pushed up over 97 resistance yesterday and that level is now support. RSI divergence is suggesting some retracement here:
On the bigger picture there is something interesting happening on copper, which is testing the upper trendline on a large symmetrical triangle. if that breaks up that would obviously look bullish for copper, but would also give some extra support to the current bull move on equities:
I posted a very speculative chart on 30yr Treasury Bond Yields (TYX) about three months ago looking at a possible bottoming setup there for the 33yr bear market in bond yields (bull market in bonds). I was speculating that TYX might bounce to the 34.9 area to complete the head on an IHS to take TYX back to main resistance in the 44 area. That's looking good at the moment and TYX closed at 31.68 yesterday. Here's that setup on the TYX monthly chart:
Looking closer at TYX on the daily chart TYX is now in a solid looking uptrend, with decent short and medium term support trendlines, and if TYX is currently in an overall rising channel then we should see the 35 area hit sometime in the March - May period. If TYX is forming an IHS and we see a strong reversal at that level to make the right shoulder that would be a good fit with a strong decline on equities starting in the usual late March to early May period that we've seen in recent years. Food for thought:
While I've been writing the little ES double-top has broken down and made target. That could be it for downside today but the strength of the RSI divergence is suggesting at least another test of the 50 HMA. On the bigger picture, with the weekly upper bollinger band rising at about ten points per week, the high yesterday at 1509 was only three or four points short of the area where I would expect to see the highs this week so in the absence of some retracement first potential upside looks limited.

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