Friday, September 3, 2010

WMA 3 September 2010 - Market decision point - again

The weekly TIP chart is showing a bearish divergence about to mature. The current rally should be matured with a new high over the next 2-3 weeks. The daily chart pose a slightly different picture with being overbought and indicative of a likely retracement. The daily bearish divergence is matured and has probably just started to equilibrate.

The weekly JNK chart although maintaining in bullish area, is weakening after equilibrating a bearish divergence, and is currently neutral. The daily chart however, looks ready for another bullish pop and should be clearer by this weekend.

HYG appears to be similar to JNK.

LQD still maintains its divergence with JNK and HYG. LQD has had a 3 month long rally and its previous bearish divergence was not realized. The daily chart has a record rally and has a recent bearish divergence that is correcting. IT will be a while before this correction completes.

Copper weekly prices are about to make a new 52-week high. The indicators are bullish although it is noted that the recent rally did not have spectacular volume support. Then again, a spectacular volume support would mean that the rally is about done. The daily chart is beginning to register a bearish divergence maturing, but for now, higher copper prices should be expected at least for the rest of this week into next.

Of the Napier’s leading indicators, there appears to be some conflicting signals with a slight bias to the bullish rally, at least for the next two weeks. Thereafter, IF there is a correction, it will happen then.

The weekly USD futures is weak. Having retraced to the COP (61.8%) at 83.4, it is likely to be starting its downtrend with the indicators pointing to weakness. A likely support is seen at 78, and its target for now is 75. The daily chart reflects a similar picture with the USD currently at a pivotal point and more likely to display weakness in the days-weeks to come.

Recent trends have it as a weaker USD with stronger general equities market.

SPX / S&P500

The weekly chart posted a higher low, fighting against a downtrend and keeping support. The daily chart apprears bullish for the short term, which needs to be confirmed by the end of the week, meaning that the next 3 days would be crucial to determine a good direction.

/GC / Gold
The weekly chart shows that Gold is bullish and will continue to be so regardless of a ever growing bearish divergence. This bearish divergence is almost a year old! And I see this going on for another good 4 weeks. However, the daily chart looks overbought and almost time for a rather serious retracement by next week.

/CL / Crude
The Crude oil weekly chart show that it is rather neutral at this point. While some indicators are pointing to a bearish outcome, others are building up a bullish scenario. On the daily chart, crude has to break and keep above 75 to be in a bullish trend. Currently, it is slightly biased to being bullish.

From the above (rather quick) analysis, it reminds me of a case where there is a crouching bear hidden bull. Much depends on the employment data this few days and until a favourable data plus confirmation breaks are in place, it is pretty much a 60/40 in my opinion… the bulls have a slight edge.

The MadScientist – 3 September 2010

Note: Any material posted here is of my sole opinion, and my opinion may differ from others. It is definitely NOT a solicitation to do anything else as a consequence of reading this material. The material presented here is intended for educational purposes only.

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