From the Charts: Macro Month in Review/Preview

Saturday night I reviewed the macro market indicators for the week. It looked then that we would see stronger prices for Gold and Oil and a continued pullback in US Treasuries. I suggested that US Dollar Index was in a range and although volatility was falling, that it would not be a catalyst for equities to break their range. So far this week Treasuries and Oil are bucking that analysis, heading higher and lower respectively, while Gold, the US Dollar Index and equities are behaving as expected.

Tonight being the end of August we get to add another data point and broader perspective from adding the insights of the monthly charts. Let's take a look.

Gold Monthly
Gold printed a bullish engulfing candle this month, pointing to higher prices to come. It remains in a broad rising channel. All of the Simple Moving Averages (SMA) are strongly rising. There is resistance at 1265, and support below at 1226 then 1122 lower. This has more upside room.

West Texas Intermediate Crude Monthly
Oil on a monthly basis remains in a range between 67.70 and 80.00, but looks to test the low end. It printed a bearish candle this month but is above support of the rising 20 month SMA. The Moving Average Convergence Divergence (MACD) is falling and about to cross, boding lowing prices, and the Relative Strength Index (RSI) is also negatively sloped. There is support lower at 60.55 and resistance at 77.25, the 50 month SMA, and then above the range at 88.50.

US Dollar Index Monthly

The US Dollar Index printed a hammer candle, bullish, on support of the 20 month SMA at 81.30. It is within a symmetrical triangle that could take some time to resolve. There is more support lower at 80.43 as well then the bottom of the triangle at 75.50. Resistance shows up first at 85 and then 86.50.

iShares Barclays 20+ Yr Treasury Bond Fund Monthly
TLT, my proxy for US Treasuries, is in the midst of a bullish continuation since the Three Advancing White Soldiers pattern put in from April through June. Resistance above is at the 113.70 top from December 2008 and January 2009. Volume has been trending higher and the MACD shows a positive future. Support on a pullback can be found at 101 and then 100.

VIX Monthly
The Volatility Index became less volatile as all the SMA are converging. There is support at both the 100 and 200 month SMA's between 21.19-21.60 and near 17.50 below that. Resistance comes first at the falling 20 month SMA, 29.07 then 35. It looks to be settling in to a smaller range as long as the SMA's keep converging.

SPY Monthly
The SPY printed a bearish Dark Cloud Cover pattern this month, where the monthly candle started higher and ended lower retracing more than 50% of the up move from the previous candle. The MACD is rolling over and the RSI also pointing lower. There is support lower at 103 then 98.62, and resistance at 107.12, the 100 month SMA and then 108.09 the 50% Fibonacci retracement level followed by 111.75.

IWM Monthly
IWM is more bearish than SPY, printing a bearish engulfing candle this month, after testing the 66 resistance line and failing. There is support at 60 and then at 58.21. Resistance comes first at 62.50 before the 66 level.

QQQQ Monthly
The QQQQ shows a flag after falling from the double top at 50 - 50.65 illustrated above. It also printed a bearish Dark Cloud Cover candle, just above support of the 50 month SMA at 42.16. There is further support at 40.22 below. The 46.50 - 47 range will be the first resistance on an up move. The MACD and RSI point lower for this as well.

In summary, Gold, US Treasuries and the US Dollar Index look strong on the monthly charts. Oil looks to test the bottom of a range. The Volatility Index seems to be settling with the tightening SMA's and the Equity ETF's are poised to move lower. This monthly view supports a continuation of the action seen so far this week.

Trade'm well!

Top 10 Ideas for the Week of August 30, 2010

After looking at over 500 charts and posting my thoughts on over 200 of them, I have found some good setups for the week. This week's mix contains 6 short setups, and 4 long ideas, with one breakout. These were selected in and should be viewed in the context of the broad market trend reviewed Saturday which looks to bring stronger prices for Gold and Oil and a continued pullback in US Treasuries. Watch the range for the US Dollar Index to signal its next move. Although volatility is falling, it remains with in a range and will have little impact on equities, which appear to have at least a slightly bigger pop in store for the week before hitting resistance, after a rough week this past week. Here are the top ten tonight in no particular order:

1. Bank of America, Ticker: BAC

This stock looks ready to explode down out of this tighten wedge. Under 11.90, the first support is 10.50 followed by 9.25. The weekly chart confirms the move lower will continue to near 10.

2. Hi-Tech Pharmacal, Ticker: HITK

The month long bear flag seems ready to break down below support of 16.80, from a glance at the weekly chart. If it does then the target is 14.

3. Impax Laboratories, Ticker: IPXL

Needs to hold 16.28 the 200 day SMA or 14 is coming. If it holds then resistance is at 17.59.

4. Salix Pharmaceuticals, Ticker: SLXP

It had a good move Friday above the 100 day Simple Moving Average (SMA) but if it loses that there will be a slow march down to the 200 day SMA at 33.44. Note that the SMA's are starting to rollover as well.

5. American Dairy, Ticker: ADY

this stock looks to have finally found a bottom near 7.20. Rising now if it can clear 8 it can can run to 9.75 or more. The weekly chart printed a very bullish Dragonfly Doji.

6. Sotheby's, Ticker: BID

This stock is finishing a symmetrical triangle near the cross of the 50 day and 200 day SMA's. The Moving Average Convergence Divergence (MACD) indicator points to the chances of a break out being lower. The target on a break lower would be 22.30 initially.

7. Select Comfort Co, Ticker: SCSS

The 4.75-5.00 area has been big support in the past and is proving so now as well. Also the bullish candle Friday with an expanding range adds weight to the argument for a reversal. From here it looks to go higher with 6.00 as the first resistance and then 6.50.

8. Whirlpool, Ticker: WHR

The falling wedge is tightening and bodes for a big move to come. The weekly chart points lower, with support at 70 and then 65 on a break of the wedge. If it breaks higher above 77 there is resistance at 82 and then 86. Watch for the break and play accordingly.

9. First Solar, Ticker: FSLR

If it can get above the 130 resistance area it can run to the next area at 140-141.33.

10. Priceline.com, Ticker: PCLN

The range on this stock has been widening over the last few days and if it keeps widening it could spell trouble, as the SMA's are all a long way down. the first clue to a fall would be a crack of the 280 support and test of 272 below. A break of 305 and hold there and you can forget about this going lower. One might play this with put spreads due to the high stock price. Also I can already see Adam Warner (@agwarner) calling me un-American for betting against William Shatner, so make sure it is happening before you play.

Bonus Idea: Network Engines, Ticker: NENG

Not for you big boys whipping around 100,000 shares, but a decent setup for a portion of a portfolio. This stock is finding supp at 1.35. The MACD is turning more positive and there is resistance at 1.70 then 1.80.

Trade'm well!

From the Charts: Macro Week in Review/Preview August 27, 2010

Coming into this week the market looked to bring stronger prices for Gold and the US Dollar Index with US Treasury Bonds trying to join the party. Oil still looked broken and on a path lower. And a rising volatility index combined with that stronger dollar looked to continue to press stocks lower. This played out as expected early in the week with with Gold and the Dollar Index rising and US Treasuries hitting new low yields, thus higher prices. Stock indexes and Oil did run lower. Mid week Oil found a bottom and Bonds and the Dollar Index a top but Gold just kept strong. Equities were bounced around Thursday and Friday by data and speeches but remain lower for the week. What does next week hold? Let's go to the charts.

Gold Daily

Gold Weekly

Gold had a good run this week and looks ready to go higher still. After a quick hard test of the 100 day SMA on Tuesday, it rallied Wednesday and held there with a couple of doji days the rest of the week, within the consolidation channel between 1233 and 1245 from the May - June time-frame. 1255 is the next resistance area from the highs in late June. The weekly chart shows that the trend remains higher after the test of the channel and 20 week SMA a little over a month ago. Support comes at 1210-1215 area from the daily chart and 1206 lower from the weekly.

West Texas Intermediate Crude Daily

West Texas Intermediate Crude Weekly
Oil put in a reversal this week that looks to continue into next week. This is seen in both the daily and weekly charts. The daily chart shows the rally Friday broke through and held the 74.80-75 resistance area. The candle with virtually no upper shadow shows that after testing the 72 support area the bulls were in charge the rest of the day right into the close. There is some resistance at 76 then the confluence of SMA's between 76.90 and 77.94. The weekly chart printed a bullish hammer candle after testing near the strong support around 71 from December, February and May through June. Resistance can be seen at the meeting of the 20, 50 and 200 week SMA's between 77.00 and 77.67.

US Dollar Index Daily

US Dollar Index Weekly
The US Dollar Index may be resting or have found a short term top. The daily and weekly charts conflict slightly on this one. The daily chart shows the index being pushed down by the 50 day SMA, but in a fairly narrow range flag with 82.50 there to help as support and the 20 day SMA at 82.04 lower. A break below 82.04 would signal a top was put in. The weekly chart shows the bullish flag above the 82.25 support area with 83.88 as resistance higher. A break through the 50 day SMA would signal a move higher.

iShares Barclays 20+ Yr Treasury Bond Fund Daily

iShares Barclays 20+ Yr Treasury Bond Fund Weekly
Treasury Bonds, using TLT as a proxy, may not be dead but are badly wounded and the beating looks to continue going into next week. The daily chart shows a fall out of an expanding rising wedge that accelerated after it broke the wedge support and strong volume. There is some support at 105 and then 104 below before the gap fill support at 102.67. The weekly chart shows a shooting star or an evening star or inverted hammer candlestick depending upon who you study. Whichever one you choose it is very bearish with the shadow being more than 10 times longer than the real body! Support on the weekly chart comes at 104 and then 102. Should the world look like it was going to end and everybody wanted Treasuries, 109.50 would be resistance, but I think pigs fly first.


VIX Daily

VIX Weekly
The Volatility Index, VIX, remains elevated by historical standards but in a range between 22 and 30 which looks likely to hold next week. The daily chart has recently defined that range between 22 and 28.41 and this week has been heading towards the bottom of the range. The weekly chart shows the 20, 50 and 200 week SMA's creating a boundary between 24.45 and 27.22. If it breaks out higher 32.58 would be resistance.

SPY 60 minute

SPY Daily

SPY Weekly
Moving to the equity index ETF's, SPY continued to trade a fairly narrow range this week. The 60 minute chart illustrates all the points of resistance and support in the range between 104.18 and 110.50. It is also interesting to see that the downward sloping trend line, which extends back to the mid-May highs near 117 is still occasionally playing a role. Most interesting is the support that appeared at 105 this week despite a couple brief dips to the 104.30 area. The daily chart shows a bullish hammer candle Friday but also resistance at 107.10 and then all the SMA levels higher as well as that 104.30-105 support area lower. The weekly chart also printed a bullish hammer within the range of the flag that has been waving since late May. Resistance on the weekly comes from the 20/50 week SMA area, between 109.74 and 110.37, near the top of the range illustrated in the 60 minute chart. Although the SPY looks bullish expect it to run into resistance quickly. It still in a range.

IWM Daily

IWM Weekly
The Russell 2000 ETF, IWM, also closed the week on a bullish note printing a hammer candle on the daily chart back above the 60.25 area that has been resistance/support. There is also plenty of resistance on this chart higher at 62.78-63.05 from the bearish 20/50 day SMA cross and then 64.15 above it. The weekly chart nearly printed a dragonfly doji (the inspiration for the company name), a very bullish formation. The 58.47 -59 support area stands out on this chart as it has been tested and held 3 times since February. The weekly chart also exhibits a lot of resistance points in a tight range above, from the 20, 50 and 200 week SMA's converging between 63.09 and 65.19. Although a bullish set of charts expect this to remain with in theses bounds this week.

QQQQ Daily

QQQQ Weekly
The Q's also ended the week stronger with a bullish hammer candle on the daily chart, which stopped just below the 44.25 resistance area. This too has many resistance points higher starting with the gap to 44.50 the 20, 50 and 200 day SMA's between 45.17 and 45.71 and the 45.75 top area from July and early August. Support lower continues to be at 43.50 and 42.50. The weekly chart also printed a bullish hammer, but at the same time lost the 50 week SMA. The 200 week SMA flat-lined at 42.44 is support and resistance at 45.89 and then 46.60 higher. This also appears to be in a range with the expectation for that range to continue this week.

So next week looks to bring stronger prices for Gold and Oil and a continued pullback in US Treasuries. Watch the range for the US Dollar Index to signal its next move. Although volatility is falling it remains with in a range and will have little impact on equities, which appear to have at least a slightly bigger pop in store for the week before hitting resistance, after a rough week this week. Good luck next week!

Q: Is the Bond/Dollar Run Over? A: Maybe

Earlier today there were chilling technical indicators pointing to the end of the US Treasury Bond and US Dollar Index rally. Here is the post as written about 12 noon.



Original Post

It is interesting that more equity traders a now paying attention to the price action in bonds and the dollar. Sentiment traders would think this might suggest a top is near. But part of the attention is due to the rise of ETF's available to trade these markets. In fact these ETF's do a pretty good job of communicating information on the macro markets to equity traders without leaving their space. This is valuable information as to the potential future direction for equities.

I posted these two charts about 10:30 today

iShares Barclays 20+ Year Treasury Bond, TLT


Powershares DB US Dollar Index Bullish, UUP


When I first posted them I noted that it was early in the day but that something interesting was happening. The US Dollar Index and Treasuries have been trading in tandem lately. The TLT is creating a shooting star formation. This is where the price opens on a gap and jumps higher only to fall back. If it closes this way it is very bearish. It's companion lately, UUP, is in the process of printing a bearish engulfing candle. This is also bad news for the pair and confirmation of a potential topping process in Treasuries.

Be watchful as to how these close. Strong Bonds and Dollar have been driving equities lower. Use these new tools. A reversal could change things.

Trade well.


What has happened since then?

The TLT found support and rallied back to near the days high and the UUP also rallied above yesterday's open.

iShares Barclays 20+ Year Treasury Bond, TLT

Powershares DB US Dollar Index Bullish, UUP


So no shooting star. No bearish engulfing candle. Just a gap up on a strong candle for TLT and a continuation of the resting/flagging since Friday for UUP. Does that mean that we have not topped and are ready for more upside? Not necessarily, as both TLT and UUP are testing resistance (108 for TLT and as marked on the chart for UUP), but it does tell us that the long foretold bubble top in bonds and the dollar did not happen today. In fact what we learned today was that the bond and dollar bulls, after an early lunch, came back to their screens and saw the pullback as value and started buying again.

So maybe we do go higher still or maybe we don't, but we learned, that for today, that the bulls are still in charge.

Trade well.

Is the Bond/Dollar Run Over?

It is interesting that more equity traders a now paying attention to the price action in bonds and the dollar. Sentiment traders would think this might suggest a top is near. But part of the attention is due to the rise of ETF's available to trade these markets. In fact these ETF's do a pretty good job of communicating information on the macro markets to equity traders without leaving their space. This is valuable information as to the potential future direction for equities.

I posted these two charts about 10:30 today

iShares Barclays 20+ Year Treasury Bond, TLT


Powershares DB US Dollar Index Bullish, UUP


When I first posted them I noted that it was early in the day but that something interesting was happening. The US Dollar Index and Treasuries have been trading in tandem lately. The TLT is creating a shooting star formation. This is where the price opens on a gap and jumps higher only to fall back. If it closes this way it is very bearish. It's companion lately, UUP, is in the process of printing a bearish engulfing candle. This is also bad news for the pair and confirmation of a potential topping process in Treasuries.

Be watchful as to how these close. Strong Bonds and Dollar have been driving equities lower. Use these new tools. A reversal could change things.

Trade well.

Top 10 Ideas for the Week of August 23, 2010

After looking at over 500 charts I have found some good setups for the week. This week's mix contains a balanced 5 short setups, and 5 long ideas. These were selected in and should be viewed in the context of the broad market trend reviewed Saturday which looks good for more upside on both the daily and weekly charts for Gold the US Dollar Index and Treasury Bonds. The Equity market could see a positive move in the very short term but the weekly charts point lower. Here are the top ten, short set ups first, tonight in no particular order:

1. MIPS Technologies, Ticker: MIPS


Breaking above the rising channel. If it gets above 6.50 then it sees resistance at 7.21 followed by 8.32. Support is at the channel near 6.25.

2. Akamai Technologies, Ticker: AKAM

It is breaking resistance at the 46.76 area which has stalled it twice before. Now there is resistance at 51 and then 56 from 2007. A rough measured move looking back from the run from 26 to 36 then consolidation between 36 and 46 also puts 56 as the target.

3. Staples, Ticker: SPLS

Watch this for confirmation of the bullish hammer candle from Friday. If it confirms then there is nothing to do here. If it fails then when the stock cracks 18.50 to the downside the next support level is 15.50.

4. Sears Holdings, Ticker: SHLD

This stock failed to rise from a long run down and now is testing 60 again. If it breaks below 60 then 55.50 is the next support. The flag after the latest run down suggests it will try very soon.

5. 51job Inc, Ticker: JOBS

A Top 10 Pick last week, broke out and is flagging now. If it gets above 30 it can run to 32. Support is at 29.20.

6. EnergySolutions, Ticker: ES

the bullish hammer candle printed Friday held the 4.40-4.50 support area. If confirmed it is ready to go higher and sees resistance at 5.17 followed by 5.70.

7. Callon Petroleum, Ticker: CPE

Although this broke down on Friday the strong bearish candle points lower still. Support is first at 4.25 and then stronger at 4.00.

8. Intuitive Surgical, Ticker: ISRG

Another strong move down on Friday on big volume. Looks like more downside. Underneath 290 it sees support at the 275-283 area and then stronger support at the 248-261 range.

9. Delcath Systems, Ticker: DCTH

This printed a bullish hammer candle on Thursday and has held above support at 6 on Friday. If it continues to hold resistance above is at 6.81 on the way to 7.70.

10. Visa, Ticker: V

Visa has been a short idea on the Top 10 list previously and now looks to print some money. Friday's big down move on better volume cracked 70 but came back to hold above it. It still looks weak and a hold below 70 could lead to the 57 area as a target.

Bonus Idea: GMX Resources, Ticker: GMXR

What did this company do wrong? The stock has been hammered lately and looks like it has more room to the downside. If you are not already short this one support lies at 3.43 nearly 25% below current levels.

I wish to apologize to those that watch this process unveil throughout the weekend for the lack of transparency this week. A recent move and technology issues forced me to cut a process that usually takes about 10 hours into about 3hours. The most time consuming part of this process is posting all the charts that do not make the list. It is necessary to review them all, and I did this weekend as always, but had to cut back on the postings in order to get this out. Back to normal next week. Trade well!