The saying that "Bull Markets climb a wall of worry" seems more apt to me day after day. Over the last few days I have encountered a number of traders, market commentators and blogs who are all growing increasingly nervous here and looking for a top....again. The factors these sources are citing include topping patterns in Copper and China; speculative bubbles in Silver; Dow theory non-confirmations; sell in May and go away; the anniversary of the May flash crash; financials underperforming; the end of QE2; spurious Elliott Wave counts etc etc etc. I don't think many of these issues have validity and last time I checked the S&P500, Nasdaq 100, Dow, Russell, AUD were all at new interim or all time highs. Over the last 2 months this market has shrugged off the European Debt Crisis, the horrors of the Japanese earthquake and an S&P downgrade of US debt- this is stong action! As ever, the charts and the technicals are my primary guide and I wanted to show a number of global markets to illustrate that this market still has some way to go yet.
Emini June Daily:
This is a great basing pattern under the 1340 level and we have successfully broken out. Any retracement back to the 1345/1340 level is HEALTHY and a great buying opportunity. The target for this pattern and market I believe is 1430. This is in line with my 2007 parallel scenario that we are still following very closely: http://swingtradersedge.blogspot.com/2011_04_15_archive.html
AUDUSD Daily:
The AUD continues to surge after breaking out of the multi month consolidation pattern. We have reached my first target of 1.10 which is a 100% projection of the previous range. However, momentum has made a new high and thus we should be looking for buy the first pullback. I don't want to sound like a broken clock but once again- DON'T FADE THIS.
AUDUSD Daily ii
I have been following this pitchfork channel on AUD Daily for a while and it has been working beautifully. The 3 reference points are the 2008 November lows, the Nov 2009 highs, and the 2010 low. The market then went on to hit an interim high at the median line in late 2010 and a major low recently in Feb 2011. If this channel continues to play out, we are looking at a potential target up at 1.13/1.14.
China Composite Daily:
China remains in a consolidation pattern NOT a topping pattern. No doubt I was early in my bullish market call but I don't see any reason to change this until the supports at 2800/2850 breaks. Wait for confirmation as which ever way this breaks, there will be a strong impulse.
Copper Continuos Daily:
Copper is often seen as a lead market for risk assets and I couldn't agree more. Currently, this market is consolidating in a clear range. Certainly, it has been underpeforming other commodities but this is no reason to turn bearish. The 400 level is key support and keep this on your radar. Note that this consolidation is occurring ABOVE its previous 2008 highs and ABOVE the entire weekly range which is bullish. Look for breakout trades here
Weekly:
Certainly, there are a number of fundamental macro risks out there and I am not naive enough to think it is all plain sailing. However, the reason why I use technicals and price action is because its puts you on the right side of the market. Timing the market using fundamentals is close to impossible. Hopefully these charts have illustrated my point and put you on the right side of the market in the coming weeks.
Thanks
Austin
