Saturday, May 29, 2010

Crude oil & Gold - Trend update

Violent slide in Crude was even more violently reversed off the $67 lows for a quick ~38.2% pullback. Now that we had that tight range day on Friday my take is a new test of the Lows.

Interesting to observe is how Friday's price action is confined inside the chart points markets by the horizontal levels. DMI has a pending Long signal and trend strength is going down so I expect more range trading for the time being.

Last Friday's slide was bough up and closed near the Open but trend strength is on its lowest level.

Spike in traded volume is similar to the previous 1228 peak and while timing is tricky I still monitor price action for a continuation of the Reversal move at least until the 1248 high hasn't been challenged again. The thing is however price is swinging above the 8-MA which I use for short-term momentum indication - so I assume bulls will make an attempt for a new push higher.

Thursday, May 27, 2010

Metals are giving mixed signals while Gold's trend is still intact

Platinum broke the trendline support but still above the long term horizontal Support which is key to its present trend.

Palladium had the most Bullish trend and the steep selloff is giving sharp alarm of exit. The horizontal Support is key to the current direction just like in Platinum but the signal here is far more acute.

Gold - the ultimate safe haven... Still trend channel is intact and holding above 2008 Highs. However the Leaders in Metals complex are in alarm mode and here is a real test for the dominant assumption that Gold will save your wealth.

Copper is the prime industrial indicator and as such we gotta be prepared to see industrial contraction since it broke the prime trendline support and now as in the first 2 metals the horizontal Support is key to the market sentiment and needless to say a breach below would be a major Bearish sign.

Friday, May 21, 2010

AUD/USD - The Reversal path

The analysis is based on the assumption that we saw the Lows of the Flash Crash saved today and this translates to bottoming in the commodity currencies and AUD in first place.

Daily chart: the Diagonal T/L support was breached but we have retraced a good part and today will have a Bullish Harami /Inside Day/ a good sign of reversal.

4-H chart: a bit strange use of Fibs but this way they fit with horizontal Supports off historical chart point.

Tradewise 0.8350/60 is needed to be decisively cleared for a powerful pullback which ultimate Resistance will be the Feb 2010 Low at 0.8575.

Thursday, May 20, 2010

Market Psychology Cycle

Crash of the BRICs - yet nobody's paying attention?

Shanghai Composite has had its Dead Cross in a while but in the last 2 weeks it has been violently wiping out market cap in a fast falling trend. While ADX and RSI might be indicating oversold conditions I'd pay heed to the fact that SSEC is leading the BRIC's pack.
Technically there might be seen some violent pullbacks as we all know are characteristic to Bear markets but I would never establish a Long position until the trend has shown signs that it has run its course. Right now we are just starting.

Russia's RTS has just closed below 200-DMA, broken a long lasting Support Trendline and is ready to roll as Shanghai has shown the way. The ADX is Just starting to grow and the trend will gather force once it closes below 1350.

India's Nifty Index has also just breached the 200-DMA and after a brief pullback again trading below the important Trendline Support. ADX is showing growing strength in the developing trend.

Brazil's BOVESPA is tightly following the Leader (Shanghai Composite). It has been rejected at the test of the 200-DMA and it's making new lows with ADX showing real strength in the move.
The chart is actually showing massive Double Top formation and the breach of the Neckline around 62/64K is showing immediate targets around the 52K lows.

Wednesday, May 19, 2010

Crude Oil is leading the crash - Gold is Lagging

EUR/USD - Awfully Bearish Sentiment

The Euro enjoys an awfully bearish sentiment and got a steep and overextended selloff in the late NY session today.

I'm buying the bottom here for a short-term bounce as I'm tempted to explore the contrarian psychological approach to buy when the sentiments is calling for the ultimate demise on the Euro.

Tuesday, May 18, 2010

Gold - Trend Reversal

Macro Update - Trends & Ranges

Possible Blow off top in USD Index.

Possible Double Top in GOLD?

30-Year T-Bond is range-bound with scope of testing the highs - that's implying lower yields...

S&P 500 was rejected at the 50-Day MA Resistance - RSI and ADX are in confluence with he downtrend in the stock index.

Sunday, May 16, 2010

SOFIX testing first Support at 398-399

Following the Feb 25, 2010 post:

SOFIX is still trending down and last week just broke the previous low and tested the 398 Support level. Technically the index is moving inside the Trend Channel which is the first Support at 398-399 is broken decisively with a close below will run into the Critical Support area at 360-344 where the Trendline support confluence is located.

That scenario depends on the breakdown of the 398 level but since we just run into the SELL in May and Go Away mentality and the S&P crashed ahead of the 50-Day MA (1174) Resistance it is most probably that we are back to the global correlation on the way down (since we kinda missed the move up that most of the Developed and Emerging Markets enjoyed).

The important spot below 399 is the August 2009 Gap (360-380) which is begging to be filled by any textbook example. So the focus is if the confluence of the 344 support and the Trend channel bottom will provide the sufficient cushion for a reversal.

EUR/USD vs. Eurodollars - Perfect correlation

Wednesday, May 5, 2010

Japanese Government Bonds - How high?

Monthly JGBs prices chart shows we are back to the 1998 highs.
So 12 years of deflation and low interest rates and we are right at the same spot. However with the increasing Sovereign Debt risks (PIGS) and the high ratio of government borrowing in Japan how high can JGBs go before bond vigilantes take matters in their hands?

I see USTs are going higher and yields down but in the case of the rising Sov debt risk shouldn't we be seeing bond selloff as investors should demand better yield to compensate them for the default risk?

Tuesday, May 4, 2010

30y T-Bond breaks Key Resistance at 120. Yield curve is steepening.

30 Year T-Bond broke the Key Resistance level at 120.
That's called Flight to quality.

Weekly chart of the 2Y/10Y Yield Spread shows a mid-term Steepening inside the Long-term Flattening trend channel. Anyway it's a sign of Inflationary pressure in the near future.

The Yield curve is clearly steepening.