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Tuesday 9 April 2013

Fallen Heroes

Margaret Thatcher, former Prime Minister of Britain died yesterday. In my view the most talented politicians to become Prime Minister since the second world war were Margaret Thatcher and Tony Blair, and of those two, she was the only one with strong convictions and statesmanlike qualities. Adieu Margaret Thatcher,  a remnant of a bygone age when politicians ran economies without deferring to their central banker/planners, and when the solution to every economic problem, including having too much debt, was not necessarily to print money and run up more debt. In fairness she was helped in that by the head of the Federal Reserve then was the steely Paul Volcker rather than the much less impressive Ben Bernanke, but her achievements were considerable nonetheless.

SPX had a strong finish to the day yesterday and the close was at the ideal right shoulder high if an H&S is forming here. The alternative is a double-top of course and we might see that instead. I've have updated both scenarios on the SPX 60min chart below:
The pinching bollinger bands on the SPX daily chart are now only 25 points apart, in the 1545-70 range. If we do see a double-top made here I'd been leaning towards a second high in the 1576-80 rage, as failures at big resistance levels often overshoot them slightly before failing:
The ES action overnight is ambiguous. On the bear side is the marginal higher high on negative 60min RSI divergence. On the bull side the overnight action looks rather like a bull flag:
AAPL has tested the March low and there is a potentially very nice looking possible double-bottom forming there. The pattern trigger level is at 469.65 (with a target in the 520 area) and there is strongly positive 60min RSI divergence supporting at least a decent bounce here:
EURUSD rallied slightly over the ideal IHS neckline yesterday but this scenario is still in play and supported by negative 60min RSI divergence. If we see EURUSD continue up here I have the next big level at 1.313:
On CL yesterday's candidate double-bottom has evolved into a rough upsloping IHS. If we see a break over 94 the target is the 95.6 area, although in practice this would most likely mean a test of strong resistance in the 96 area:
I haven't posted the TLT chart much in recent months, and that's because there hasn't been much in terms of discernible shape to the moves since the 2012 high. Looking at it again today however it is now clear that a large falling wedge formed from there before breaking up last week. The technical target for that break up is a test of the 2012 highs, which is interesting, as moves of this kind on TLT are generally made during times of weakness on equities. Watching that with great interest:
If we are to see the H&S scenario complete on SPX then yesterday's high needs to not be exceeded by much. If we go higher then the double-top scenario will look more likely, main resistance will still be at the 2007 high in the 1576 area, and my ideal topping range would be 1576-80.

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