Technical Analysis Review for the week starting 4/13/15

S&P 500 - Daily:

 

The S&P 500 broke out of the small consolidation it had been in during the last week and looks to be headed back to all-time highs. It currently has resistance at the 78.6% retracement (note the Fibonacci grid on the chart is inverted and shows it as 23.6% retracement), but if it breaks through this it is suggestive that it should retest the all-time highs at a minimum.

S&P 500 – Weekly:

 

On a weekly basis the S&P 500 is still in a consolidation between 2,119.95 and 2,043.82 as annotated on the chart. A break in either direction would be indicative of where the trend will next move. Since the primary trend is still up, it is expected that the S&P 500 will continue to new highs.

NASDAQ (Daily):

 

The NASDAQ, like the S&P 500, has resistance at the 78.6% retracement. A break of this is indicative that the NASDAQ will reach new highs again.

NASDAQ (Monthly):

 

On a monthly basis the NASDAQ is pausing right under all-time highs from 2000. If the broad market continues higher it would be expected that the NASDAQ retests the all-time highs (5,132.52).

Russell 2000:

Of the major equity indices the Russell 2000, small cap index, is in a leadership position. The Russell 2000 leading is a positive sign for the strength of the overall stock market.

Russell 2000 (Weekly Index):

 

On a weekly basis the Russell 2000 has broken through major resistance at 1,214.77. For most of 2014 the Russell 2000 was consolidating below that resistance. It would not be a surprise if the Russell 2000 was to pullback and retest the former resistance level (now support).

 

NYSE Advance-Decline Line:

 

A significant positive for the overall stock market is that the AD line is again at all-time highs leading the major indices. This is suggestive that most of the major indices should reach new highs in the near future.

TLT (Daily):

Bonds, as measured by TLT, are currently consolidating on a daily basis ($132.79 = resistance; $129.16 = support). A break of the consolidation shown above will be indicative of the next move Bonds will take.

WTI (Daily):

WTI may have made a WTI under resistance at $54.18. A break above this resistance would be suggestive that oil has entered a new uptrend at least in the short-term.

VGK (Daily):

 

 

Europe, as measured by VGK, has had a very strong 2015, rising over 10% YTD. It recently broke its 200 day MA and it is consolidating right above it. A break above the current consolidation can lead to a strong upward move for Europe.

 

VGK (Weekly):

 

 

On a weekly basis Europe formed a double bottom on its 200 day MA and is currently consolidating below resistance at the 50 day MA.

FXI (Daily)

 

China, as measured by FXI, had a parabolic up move last week. After such a strong upwards move a consolidation is expected.

FXI (Weekly)

 

On a weekly basis, China’s recent strong up move broke through multi-year resistance. This is very positive sign for China, and potentially a sign of a new primary trend.

 

 

 

 

Dollar on verge of appreciating?

Friday April 13th the big news was gold falling over 5%. While the US dollar index did not have a big move, analyzing other charts it is indicative that the US dollar can be on the verge of appreciating.

GBP/USD:

EUR/USD:

Looking at GBP/USD and EUR/USD they seem to be in possible bear flags, with a breakdown possibly imminent.


USD/JPY:

The USD/JPY had recently broke its multi-month uptrend line, came back and touched the uptrend line., now looks like it can fall down from this point.

TBT:

Bonds measured by the TBT (ultra-short) recently broke its 200 day moving average came back and touched it, now looks like it can fall from this point. This means bonds will increase in value (yields go down).  


Gold:

Gold broke its multi-year support possibly entering bearish territory if it stays below. Silver held its multi-year  support line, but if gold continues to go down silver can follow.


If confluence is seen with all the things indicated above the US dollar can endure a significant appreciation. This can be bearish for equities and bullish for bonds. Fundamentally, deflation is still possible in the United States so it is something that should be watched.

Bonds continuing downtrend

Bonds measured by the TLT is down a little more than 10% since its peak in July 2012. Currently the price has been below its moving average 200 for a couple of weeks now, and seems to have just broke down from a bear flag.

TLT:

As you can see TLT has gapped down from its multi-week consolidation. This short term down trend can continue down to around $113.00.

Market paused for potential upside

For the past five trading days the markets has been trading in a narrow range. Prior to this was two large candles potentially making a bull flag. To confirm this a confirmation candle on high volume is needed.

S&P 500:

Gold & Silver Short Term Bearish

A while back I wrote about how gold and silver had formed reverse head and shoulder patterns and broke out. Right now it looks like both gold and silver are falling short term.

Silver:

Silver in a bear flag.

Gold:

Gold is in another bearish set up, consolidating right under its MA 200.

Both of these charts need to wait for confirmations to confirm this setup. Medium and long term I still think that gold and silver are both locked in their ranges ( gold $1525.00-$1725.00, Silver $35.00 - $26.40).

Equities Following Precious Metals

A couple of days ago I wrote about how precious metals had formed an upside down head and shoulders pattern and have since broke out.

Gold:

Silver:

Right now looking at the major American equity indexes they seemed to have since formed their own head and shoulders pattern and broke out today.

S&P 500:

Nasdaq:

Russel 2000:

What troubles me about these patterns is that the right shoulder seems to be pretty sloppy on all three of them. Moreover, their breakout occurred on very low volume making them more failure prone. On the short term I think both the precious metals and American equity markets are bullish.

Reversal for Gold and Silver

Gold and Silver had broke out from a long consolidation in early August and have since receded to that breakout point. It now looks like they are making a short term reversal, in the form of an upside down head & shoulders, from that point. Moreover, the last candlestick on both of them appears to be a breakout, giving them bullish indications.

Gold:

Silver:

If the last candlestick is a true breakout, one can expect a target price of around $1780.00 on gold and $34.50 on Silver.