Monday, December 14, 2009

Weekly Review of Stockcharts.com Publishers' Charts

In a week which saw little net change, is there a chance this week will be any different (the last full week before Christmas)?

Open with Richard Lehman's of Trendchannelmagic.com weekend summary:

12/12 -- A week-end review of the charts shows that while the large caps continue to mark time, small caps are going up and appear ready to bounce off lower mini channel lines this week. While small caps do tend to historically outperform in Dec/Jan, this lends a more bullish view to the near term situation. A breakout of the horizontal mini channel this week by the Dow would confirm that the large caps are finally joining the party.

While many are expecting a correction soon, perhaps right at the beginning of the year, a breakout by the large caps could spur another leg up, particularly if it can break the long term (3-year) declining line, which has held the index quite well thus far. Bear in mind that the small caps have already broken that line going upward and have even successfully retested it.

Supporting the bullish notion is the fact that the rising dollar has drubbed oil and gold but hardly dented stocks.

12/9 -- Another drubbing in oil and gold this morning led to a small bounce-back at the end of the day. We now see just how vulnerable these commodities are. My belief is that equities are also, but there is more hesitation to sell them before year end due to tax and year-end bonus considerations (my emphasis). The skew in index options (greater implied volatility in first quarter of '10 than now) and the premiums in the VIX futures say that there is a strong belief the market will be weak in the early going next year, but hold up until then. The flattening over the past several weeks can definitely be indicative of a greater topping formation, and short term weakness lends more support to that scenario. A modest dollar rally would be all that is necessary to take the wind out of the equity sails. Long term charts are still predominantly holding their uptrends, but the momentum is definitely waning.

Yong Pan of Cobrasmarketview still shows a predominantly neutral picture on market breadth, but bulls are sniffing a small edge.


Bollinger band width has entered a very tight range - explosive move to follow...


Is there a clue on the 10-day cycle? A 'buy' and 'sell' signal to be confirmed - so which will it be???


Put-Call ratio on a 'sell' trigger


Joe Reed tracks the dollar; slow stochastics not oversold so will it head fake and create a bear trap (on a new low??).


By CCI metrics the Dow has yet to top - will this mean a break of 10,500?


Another tick in favour of a dollar beartrap is the oversold and prime-to-bounce condition in the Gold and Silver Index. The December high is crying out for a retest to confirm what should be a long standing top.


Oil breaks support and backtests with an ideal short set-up (stops on break of $74). Looks toast with likely significant supply in the $76-82 range.


Matthew Frailey of Breakpointtrades tracks Small Caps. Still waiting for the follow through breakout.


Stochastics for Weekly S&P overbought, but this reflects more on the strong trend than any cue to 'sell'


Volatility has entered a trading range having broken from its long standing decline. Might yet drop to the teens but a period of higher volatility is not far off (a mini-crash sometime in 2010??)


Tracking commodities is Jack Chan of simplyprofits; gold on a clear sell but can it find support at its 50-day EMA:


It would still appear markets have one more run in the tank. Futures are suggesting a bright open for Monday which might be enough to trap any bear who had built short-side positions at recent trading range resistance. Any short covering would further fuel a rally. During this time the VIX could drop into the teens but it may only be a temporary move as the New Year will likely see a move to profit taking.


Dr. Declan Fallon, Senior Market Technician, Zignals.com. November 2009 has seen a significant upgrade and is on course to becoming the eBay of finance with our new Beta MarketPlace and a new rich internet application for finance, the Zignals Dashboard. Zignals now has new fundamental stock alerts, stock charts for Indian, Australian, Frankfurt and soon Canadian stocks, tabbed stock list watchlists, multi-currency portfolio manager, active fundamental system stock screener and trading system builder. New Forex and Index data.

 
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