Thursday, February 11, 2010

Quick Technical Update…

We’re still making higher highs and higher lows in what appears to be a larger level sideways wave movement that is still trapped below 1,080 on the SPX and above 10,000 on the DOW.

Today’s 105 point rise on the Industrials satisfies as the large movement called for by yesterday’s small movement on the McClelland Oscillator.

Below is a 30 minute chart of the SPX. You can see that we broke the channel to the upside. This brings up the question, are we now in a larger degree wave, or is something else at play? Based on the channel break, it would appear so to me, but it’s too soon to tell for sure as we still have only retraced up to the 1,080 overhead resistance level which is close to a 61.8% retrace of the previous wave. The 30 and 60 minute stochastic indicators are both overbought, but the 5 and 10 minute are oversold – this could lead to a little higher first, perhaps a test of the 1,090 pivot, then a pullback? Well find out tomorrow:

The XLF produced an interesting daily chart today with a hammer or hanging-man type of candle today. It came on much lower volume, note the dramatic decrease in volume with the slight rise in price, definitely corrective looking. The XLF has been bouncing off its 200 day moving average, the rest of the indices are not that close yet. The indices all have fresh buy indications on the daily indicators, but are still on sells on the weekly timeframe.

The SPY chart shows the same diminishing volume on the weak advance:

TLT, the 20 year bond fund, has dropped below the bottom Bollinger and is close to testing the prior wave’s lows. Note that it is flirting with the very large Head & Shoulder’s neckline again. TNX, the 10 year Treasury fund is also flirting with its very large inverted neckline. No, we have not forgotten about the $2.5 Trillion+ that needs to be financed this year alone! Many people are expecting bonds to perform as a hide out like they did during wave A, but I’m not so sure and think that there is significant risk here, not just for bond holders, but for the entire economy should capital truly flee from debt. Capital will go where it’s treated best.

Gold ran right up to the top of its pennant. Watch for a break in either direction from this formation, it looks bullish, but you never know:

Keep in mind that the P&F on gold is still showing a $930 price target:

Tomorrow morning will be Retail Sales, then at 10 Eastern Consumer Sentiment, and at 2 Eastern we finally get the delayed budget deficit report, hmmm… just prior to an extended 3 day weekend as Monday is President’s day.

Buffalo Springfield - For What Its Worth: