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Tuesday 15 October 2013

Too Much News

It seems that a deal on the budget and the debt ceiling that will cover the next few months is likely to be done this week. That will be a relief as this news-heavy environment hasn't been making calling direction easy. After a deal is done hopefully we'll see a return to just the usual fedwatching and earnings.

ES powered upwards from the big gap down yesterday morning and made a new rally high, again well above the daily middle bollinger band. We may see some retracement soon but at this stage the odds of making the daily upper bollinger band, currently at 1729, are over 80%, so a test of the highs is likely. If see see some retracement today then support is at the daily middle bollinger band in the 1694 area and the 50 DMA in the 1678.5 area. SPX daily chart:
Looking at the SPX 15min chart the move from last week's low is contained within a very steep rising channel, which hasn't broken down yet but looks likely to break down very soon, and quite possibly at the open today. I would expect the low on this retracement to establish a less steep rising support trendline for another move up afterwards. SPX 15min chart:
On ES the move from the low has formed a clear rising wedge with wedge support currently in the 1700 area. on a break below I'll be watching the 50 hour MA in the 1695 area and the weekly pivot in the 1680 area. ES 60min chart:
On other markets oil continues to trade in no man's land. On a break back below 100 I'd be looking for a move to the 91.5-92 area. On a break back above 105 I'd be looking for a retest of the highs. WTIC daily chart:
I posted a possible IHS forming on TLT last week and if that is going to complete and play out I'd expect TLT to turn back up towards the neckline this week. Obviously a debt ceiling deal that avoids US default should give TLT a push on the long side. TLT daily chart:
The precious metals complex is also in an inflection point area, though I'm leaning towards a bearish resolution. You can see the possible double-bottom forming within the declining channel on the GDX chart. Either we will see a bounce shortly or GDX, gold and silver are all likely to break below their current lows soon. GDX weekly chart:
I'm using the GBPUSD chart as an inverted proxy for USD here, and GBPUSD has been testing rising megaphone support in recent days. This should either break down shortly or retest the highs, but either way, this should be topping action and I'm expecting a significant retracement at least in the near future. A debt ceiling deal being struck this week may well trigger that retracement. GBPUSD daily chart:
I'm looking for some retracement on equities today though we may well see the opening gap fill before that happens.

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