Approaching An Important Target

Among the oscillators, only the A-Ds is showing important negative divergence.  This suggests that the top could still be a few days away.  

SPX hourly chart

My approach to trend analysis is multi-faceted and somewhat unconventional, using parallel lines to identify price channels as well as support and resistance areas, oscillators for overbought and oversold levels, and Point-&-Figure charts to arrive at projections.  I adjust for various time frames, and this methodology seems to bring about satisfactory results.  

On the hourly chart below, price is approaching resistance as the index is challenging the recent high of 3756.  The momentum oscillators are overbought, but after Thursday’s strong move, show no negative divergence suggesting that SPX is likely to make a new high before topping.  This is consistent with the P&F chart which calls for a move to ~3770 before reversing.  

The odds that this will be an important short-term top, if not one of intermediate stature, is enhanced by the relative weakness exhibited last week by IWM vis-a-vis SPX.  You may also recall that in last week’s letter I also mentioned that the DJTA had started to show some weakness.  It does not hurt to have a little extra confirmation!

UUP (dollar ETF) WKLY ($USD chart not available from this data provider)

(UUP) is attempting to hold around a major lower channel line.  A move back above the line could start a rebound to the 50-dma.

GLD (gold)-WKLY

(GLD) is challenging the top of its correction channel.  It is not expected to make much more gain before retracing for some additional consolidation.

GDX (gold miners)-DLY

(GDX) has been arrested by its 50-dma.  Additional consolidation which could lead to a retest of the recent lows is possible.  

SIL (silver)-WKLY 

Silver (SIL) is also challenging the top of its correction channel but is likely to meet with resistance and pull-back to create a better consolidation pattern before starting on an extensive uptrend.  

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