SPX 10x3 - forming triangle

There is a triangle forming on this 10x3 HL PF - it needs 5 columns to complete. There is an active target in place of 1,040, given by the first column of 0's from the top. We now have two un-activated targets - one to the upside of 1,380, which would get the SPX to a new high and one to the downside of 990, which would get SPX close to a previous support level.

To activate the target to the upside, the index needs to pass through 1,210. To activate 990, the index needs to reverse and move through 1,120 and ideally 1,110.

The index pushed through the long term blue bullish support line at 1,170 and is currently in a state of bearish resistance, as denoted by the red line. Unfortunately I won't be around to see how this resolves, i'm off on holiday after tomorrow!

Greece - yields still rising!

It's all gone a bit quiet on the Greek front but I suspect for not much longer - the last €12bn of the 'first' EU bailout was approved in June but will be gone by the end of August. The 'new' €120bn bailout will be issued in tranches but is dependent on Greece demonstrating it is implementing draconain austerity measures while growing its economy!! These bond yield suggest non compliance!

SPX update: 1040 still a target

It was a target given by the first column of 0's down from the top and remains a much more 'natural' spot for the market to find support, as it did in Sept last year.

FTSE 100 - forming head and shoulders?

Although P&F charts do not use time on the y axis, they are quite capable of throwing up patterns that you see in other charts, so here is something to ponder.

Could this be the early formation of a right shouldder in a developing head and shoulders pattern. See how the FTSE found solid support (eventually) at 4,800, an level it found clear support at last summer. That measure from the top (6,100) to 4,800 was 1,300 points. If one were to assume this was the neckline, that would provide a target of 3,500, a level where the index found clear support in March 2009.

It may not play out this way but it is plausible that the index could consolidate in a band between 5,050 and 5,400 before eventually giving way and move over. This would be an alternative to another straight down decline similar to the one just witnessed. The 'unactive' target from that most recent column of 23 O's is 2,500, which just does not seem realistic to me (although i'll stand corrected if something really nasty happens!). If the market consolidates for a while, we will start to see new targets to the downside that (if this scenario were to play out) would bring 4,100 in first (also a previous support level), then 3,500.

We'll see !!

FXF

Some negative divergence on the slow stochastic (which touched 100 in mid July) and the RSI has never been higher. So on normal measures it looks over-bought but I suppose it could grind higher as long as fear supports CHF.

SPX - 1,040?

This target was activated when SPX moved below 1,250, just last week (see earlier 'Maiden' posting on US indices on Weds 3rd August) -it was unactivated at the time).

Just looking at this chart shows the damage wreaked by the bears in the last 5 days. You sense it will rest at 1,040, the area where the market previously found support back in Sept 2010. Note too, the long term blue bullish support line has been breached.

Inmarsat

SPX/Vix Price ratio

Going back to 2007 - Vix making some inroads

FTSE 100 weekly chart - update

We're back at Nov/Dec 2010 for the FTSE. Down 6% YTD and another 1% today. Will the 200 week mva (5,331) be challenged soon?

NYSE Bullish Percent Index

This index is calculated weekly and (on a PF basis) is a compilation of the percentage of stocks on NYSE giving a first time PF buy signal. Each box constitutes 2% and the vertical axis runs from 0-100%.

Eg: 100 stocks in an index, 50 on new PF buy signals, bullish percent = 50%.

Changes in the index up and down can only come from the FIRST buy signal given off the bottom. That's what is recorded and all subseqent buy signals are not counted.

Eg: 100 stocks in an index, index at 50%
Over the next week 12 stocks give new PF buy signals, 10 give new PF sell signals
= a net 2% more stocks on buy signal
As each box represents 2%, a net 2% change allows the chart to rise one box.

You use the same 3 box reversal methodology as for normal PF charts, so here it takes a (3x2%) 6% net buy/sell signal to reverse a column upwards/downwards. As a general rule, areas above 70% and below 30% are the two extremes. Above 70% is overbought and below 30% is oversold.

US Indices - update

The recent action has clearly been quite violent and it may have been better for me to wait a few days to see if there are any reversals to the upside, but this is the current assessment (posted in homage to the mighty Iron Maiden, whose final gig of their 'Final Frontier' World Tour at the O2 in London this Sats i'm very much looking forward to - up the Irons!).

The overall observation is that despite the recent carnage, all of them (save the Nasdaq) are close to levels where they have found support in the past. The RUT looks to be on quite shaky ground to me but may hop back above its support level (see below). For the bears to confirm they have the ball, I'd be looking to see some sort of reversal to the upside first, then look for the bears to come back in and move these indices decisively lower. The initiative is clearly with the bears for now. A further dose of QE will require a reassessment but no sign of that at present.


Starting with the Russell 2000 (5x3), the most obvious point to note is that the blue bullish support line was taken out with the recent decline and we now have bearish resistance, as evidenced by the downward sloping red line. I'm not seeing this on the Dow or Nasdaq.

The first target from the top of 770 was achieved and I have another active target to the downside of 675. However, its quite possible that we may get a reversal to the upside first, as it can be seen that the RUT has had support at the 775 level on 4 previous occasions. I'd be more confident about the 675 target if we get a reversal to the upside first, then another reversal and a decisive move below 770 - this would indicate to me that the bears are firmly in control.

At the moment, there are no obvious targets to the upside, either active or inactive.

I'm using the Dow 100x3 PF to strip out a lot of 'noise' that would be evident with the 50x3 chart. Note here that this chart still has a long term bullish support line in place, which must be respected for now at least (I'll keep an eye on the 50x3 because if we do get a short term reversal, hopefully it will throw up something more meaningful than at present).

The first target from the YTD high of 10,100, given by that column of nine 0's is yet to be activated (sorry, meant to reference 'ua' beside it). The reason being that the index has not fallen below the level where this column reversed back up (11,900). In fact the Dow got subsequent support at this level and we are right on that line again, post yesterday's action.

There is an active target in place of 11,500. And without showing any bias, to the upside there is still an active target in place of 14,500 but note the clear resistance at 12,700.

Just for info, on the 'noisy' 25x3 PF for the Dow (not shown), the Index is currently filling a box at 11,875, where it has found support twice ( in June/July)prior to reversing. So it is possible that we may see that happen again -the index would need to rise by (25x3) 75 points to create a new column of X's.

The S&P 5x3 is slightly 'non descript' at present. The upside target of 1,365 came close to being met prior to the market reversing and we are now close to to the downside target of 1,235, post the recent action.

Note the current column of 18 o's has pushed through the blue bullish support line and we have bearish resistance overhead.

Had it not been for the move below the bullish support line, one potential pattern to keep an eye out for was a 'long tail down' which occurs when the stock/index declines 20 boxes without a reversal - it's a slight rule breach here because according to Tom Dorsey, it can present a potential trading opportunity if the index stays above the support area (which has not happened here). You would buy on the first 3 box reversal to the upside and put in place a stop loss in the box below the 'long tail' (ie stop out on the next double bottom sell signal).

The 10x3 less noisy chart provides a bit more clarity. The index is currently resting at an area where is have previously found support and reversed to the upside. There is an active target to the downside of 1,200 and an inactive one of 1,040. Again, ideally one would be looking for some sort of bounce, then a reveral to the downside, decisively taking out the 1,260/1,250 levels.

There is technically an upside active target of 1,490 still in place and see on this chart the blue bullish support line prevails and must be respected for the time being.

Finally, the Nasdaq (25x3) continues to enjoy bullish support but appears to be topping (on the 10x3 chart, the bullish support line was recently taken out at 2,700 but the chart looks very noisy, hence the use of 25 points per box).

There is resistance at 2,875 (the bears have come in twice at this level and pushed the index lower) and there is an active target of 2,500 below (which the index is pretty close to now).

FTSE 100

Will that support line hold? The 20 day mva should puncture the 50 day very soon, given the recent sell off. The 200 is 'topping' but has not turned down.

Spain & Italy 10 yr yields - onwards, upwards

While all eyes remain fixated on Congress and the US debt ceiling.......

....Italian 10 year bond yields touch a EuroZone sovereign debt crisis high....

.....and so does Spain, both widely regarded as too large to bail!

It was at 7% that Ireland, Portugal and Greece had to go to the EU. Lets see how these progress.