Tuesday, 26 July 2011
The technical picture across Asia is a mixed one indeed. My main fear yesterday coming into the session was China's inability to rally despite the positive leads from the US. When the 2750 level broke early, we saw a very strong trend day lower. This market is in a very pecarious postion indeed. How long before this has a genuine effect on the rest of Asia and maybe even the globe?
No doubt we are in a tough summer trading environment. I thought the best thing to do at this point was to break the Asian region up into the Bulls and into the Bears. At some point I imgaine all these markets will align so be prepared for false breakouts etc
As can be seen, the market has broken out of a big consolidation pattern. Yesterday saw a test of the breakout line on a weak day, but the market held in positively. Look for breaks of 3180 for a genuine move higher.
On the cusp of a major breakout? The market has been coiling up under this overhead resistance level and expect a range expansion imminently either way. Note the influence the 200SMA has had on this index.
The recent rally has run out of steam. Yesterday was a strong bearish trend day and I would expect continuation at a minimum. If the recent June low at 2600 breaks, we are in trouble.
The Longer term daily chart shows the broad consolidation pattern. Some weeks back I stated that the false break of the low end of the trendline was a great bear trap and failed pattern. If this low subsequently breaks, expect a very strong move lower indeed. Are we looking at a sharp C wave move lower?
NO MANS LAND
We have a tradeable low in place at 4450 in the XJO. However, ever rally gets quickly slapped down. Look for breakout confirmation above 4600 and I remain positive as long as we hold 4500.
No doubt the resolution of the debt ceiling debacle will give this market the catalyst it needs. My take on the S&P 500 is that it is trading at the top end of its range. Thus, this remains a fade vs 1345/1350 and look for breakout trades above.
S&P 500 Daily:
Posted by Austin at 14:45