SOFIX breaks Long term Trendline Resistance

SOFIX is testing a break above the long term Trendline Resistance in confluence with a second attempt to gain hold above the 100-Day MA.

If this test is confirmed by 2 consecutive positive closes First target is the 400 psychological mark and then 442-446 area.

Silver & Gold poised for reversal based on Trend Momentum Divergence

Silver had a stellar rise with a 73.5% YTD performance and still holding above the steep Uptrend line support. Momentum studies are DIVERGING with current trend and pointing to a waning strength in the move. Waiting for the pending Short signals in DMI and ROC to unfold.

Gold has performed rather bleak given all the media attention as a main inflation wealth protection vehicle reaching 26.3% YTD return.

Momentum studies are showing falling strength in the current trend and I'm watching for similar pending technical Short signals.

Interesting chart here is the Gold-to-Silver ratio and its relationship with the US Dollar Index.

Since June till November there was a loose positive correlation that dissipated after the FED announced its QE2 plans.

Based on this chart I would look for a bounce in the Gold/Silver ratio which would come with a strong pullback in Silver which outperformed strongly Gold since August 2010.

VIX near 1 year Lows - Warning of a pending trend reversals

Market extremes would favor taking the other side: Mainly going long Volatility and shorting the SPX. CBOE Put/Call Ratio is down however not at an extreme level so it might be giving a warning signal that the price moves hasn't run their courses just yet but it is time to stay alert of a trend reversal.

Momentum Divergence in GOLD: Pending Short signal

GOLD is Media's favorite anti-inflation play. Inflation expectations for 2011 are predominantly Flat as I watched a GS economist on CNBC today. So what happens in an overcrowded position?

Technically I see a Momentum Divergence. Rate of Change and RSI are ticking down while the price is consolidating with a slight upward Tilt.

ADX has been indicating a strong Trend however with +/-DIs closing the Spread it develops intoa classic Short signal based on Welles Wilders's own work.

EUR/USD sitting on crucial Long Term Support

EUR/USD is bouncing off the crucial Support area around 1.3076 (50% Fib) and the 200-Day MA at 1.3095.

It has bounced off the test of 1.30 support and now is trading off a long term trendline in confluence with the 200-DMA. For that to play out we need to see at least 2 closes above the short term 21-DMA which is tracking the current downtrend.

The medium term momentum framed by the downward trend channel however is pointing to 1.28 (61.8%) and 1.244 (76.4%) if the 200-DMA gives way decisively.

AMGN, Biotech firms and ETF are very Bullish

AMGN broke out above 50 & 200-Day MAs on large Volume and is heading into a solid Resistance area around 58.

Biotech ETFs are very Bullish breaking above previous Resistance levels.

The relative performance charts of AMGN to the other S&P500 Biotech constituents is pointing to Outperformers: LIFE, GENZ & BIIB.

CELG & AMGN will have to overcome strong Resistance levels and GILD is clearly struggling.

EURUSD equality amidst 1.3440 - 1.3230 range

Daily Chart makes for a downward trend channel so far.

Weekly Chart shows a giant Wedge in the making but the last top around 1.42 failed to test the Resistance Trend line so it adds an overall bearish sentiment to the big picture.

Price action is struggling below all major MAs (21 - 55 - 144) and it implies that if the 50% Fibonacci level (1.3433) of the last move is not regained decisively (which is a confluence Resistance area along with the 21-Week MA at 1.3372) a test of the latest base around 1.26 is following.

Monthly chart shows the significance of the 144-Month MA which held the last move down to 1.19 which coincided with the 50% Fib retracement.

Commodity Groups & S&P Sector ETFs' Performance YTD

Agriculture has outperformed with 38% YTD and PMs are catching up with 29%.

Energy and Industrial Metals are performing rather bleak in the 8-10% brackets.

Best performing sectors have been the Consumer Discretionary (22%) and Industrials (14%).

Energy and Materials are in the lower 5-6% bracket.

Healthcare & Financials are struggling with 7-8% Negative performance.

Business Cycles & Sector Rotation - Selection of charts

Source: stockcharts.com

Source: D.W. Dony and Associates Inc.

Source: Standard and Poor's

Source: NBER Research Paper

Source: John Veitch, CFA

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Bond Portfolio Allocation

Source: PIMCO educational section / BofA Merrill Lynch, JPMorgan, NBER

Brazil, India & Turkey Stock Indices Trend updates

BOVESPA - H&S rolling down pattern points to a rotation below the 200-DMA.

India Nifty 50 Index has a Broadening Top pattern with broken base which points to a target at the 200-DMA.

Turkey 100 Index bearish breakdown of the supporting trendline targets the 200-Day MA.

All charts have oversold reading on the Momentum and RSI technical indicators which might point to a technical bounces however it still means that the prevalent trends are intact and they might accelerate further.

EUR/USD and PIGS Bond Spreads - Trend Reversal

PIGS Bonds Spreads and rising higher.

EUR/USD Daily chart has the 3 Black Crows pattern suggesting a Trend Reversal is in place - a simple 38.2% Fib retracement target lies at 1.3634.

AUD & CAD Counter trend plays

AUD/USD & USD/CAD are trending after the QE2 announcement, however I'm buying $ against AUD and CAD as I observe these trend channels that suggest a reversal in price action - from the Top in AUD/USD and off the Bottom for the USD/CAD respectively.

TREND

Trend is like a big river - sailing with the flow is easy and pleasant - going against the flow is bold and can be done if one has the strength but when one runs out of energy the river flow takes him down the stream. That's the beauty of natural forces governing our lives and trading as well.

BALANCE

Everything we like to learn, find or experience lies within us.

All outward things or ideas are just an illusion, a play of our untamed minds.

Keeping the one, maintaining concentration and being centered all the time brings one a step closer to his true realization.

Forget the delusion that someone know something and you need to learn from somebody.

Just look inwards and learn from the immense source of knowledge and wisdom that is found in the true nature.

Reflect and keep the balance and things get accomplished without the slightest effort.

TRADING PATTERNS

US Dollar Index (DX) reversal based on the AB=CD pattern

USDX Weekly chart suggest we have a completed AB=CD pattern that implies a reversal into USD strength with immediate target 79-80.

Stock Market Momentum is topping

My previous target 2950 on Shanghai Composite (http://constellation1976.blogspot.com/2010/10/shanghai-composite-momentum-persists.html) has been met and actually exceeded. Think momentum is Topping here and I expect a rise in Volatility.

S&P still manages to squeeze higher but Momentum is waning.

VIX is like we live in bliss and economy is alright. My assumption is hang there for a while and Volatility spikes higher as some 'fundamental' data or other theme surfaces again. Be it QE2 disappointment, another debt problem or political tension - there is always something to blame for the price action. If anyone cares.

USD/JPY and the 20-MA

The 20-MA works like a Clockwork, especially on the USD/JPY.

Pay special attention to those long shadows on the Candles.

S&P at Resistance - Reversal after QE disappointment?

What we have here?

Candle pattern says Shooting star followed by a Hammer - do we have a signal - I assume at least caution here but we gotta hear what Mr. Bernanke has to tell markets at this critical junction.

10Y Note /30Y Bond Divergence - Signs of Weakness

10Y Note made Higher High however 30Y Bond might be signalling weakening in the trend of the Fixed Income market which is evident in the Momentum readings.

I could not know if bond vigilantes are rejecting owning a 30Y paper at the current low yields or the FED has more power in suppressing the short to medium term (2-10Y) yields however I take this DIVERGENCE as a sign of pending trend weakness.

Reuters/Jefferies CRB Index near its 200-Week MA

Weekly chart shows CRB is on a Breakout mode and near its 200-Week MA.

Momentum is rising and trend strength is slowly kicking in.

Inflationary times are coming and judging from the chart they will have a long way to go.

Shanghai Composite - Momentum Persists!

Following on my previous call (http://constellation1976.blogspot.com/2010/10/shanghai-composite-momentum-buy.html) on the Momentum strength in SSEC here we are above the 200-Day MA.

Next target is the confluence of the Trend Channel and the previous lows around 2950.

USD/JPY - A Tale of Trendlines and Anticipated Breakouts

USD/JPY Hourly Trendline - Works like a clockwork.

A question when it finally break to the upside remains.

US Dollar faces Reversal after FED Minutes suggest further QE

Weekly USD/JPY shows under the Long term Support line - there is possibility for a fake downbreak unless BOJ walks out of it..

Daily USD/JPY shows clear down channel that meets the trend line Support at this critical junction - my test scenario suggests we go for 84.

Nice horizontal Range withing the Rising Trend Channel in 4-hour EUR/USD - so we test 1.4 before we break lower or we see a failure right here?

Same case in 4-hour AUD/USD - Trend lines suggest we go for a test of 0.99 before a significant Resistance kicks in. The surprise will be an outright break here.

US Dollar Index looks like bottoming and yesterday candle resembles a Bullish Engulfment, however today's candle is not a good confirmation sign..

Momentum and RSI suggest we bounce off the Lows which are significant on the long term charts around 77 level and my guess is we see a wave of USD buying after the FED announced its blur willingness to ease further its policy.

US Dollar Index nearing a Reversal

I bet we reverse at this level near here at least for a short term reaction to the overstretched trend.

Price action observations & trading system contemplations

Trending and over extension of the move doesn't compromise the trend momentum.

Different time frames and fibs - now that moves exceeded the conservative projections I focus on the momentum concept as it is very insightful to learn never to fight a roaring trend and always let it go until you see a rising volatility, reversal chart pattern or some other sign of trend weakness.

Some observations on using the 13-MA in a trend.

I have drawn the consolidations that follow the price thrusts. Clear Support & Resistance levels are shown.

Time & Price relationship.

MAs are enveloping the unfolding trend but they lag and this actually helps to project a horizontal range trading after the motive wave until the MA makes up the space and then the trend move ensues.