Sunday, June 26, 2011

Dow Jones World Stock Index - Healthy Correction or More Downside to Come?

As we notice in the weekly chart above, after touching the 178.6% Fibo extension of 2010 spring correction, the Dow Jones World Stock Index correction reached a critical long term support found at the confluence of 2010 - 2011 uptrend, Fibo fan line and the flat weekly 50EMA. A break below mentioned support could quickly target the next two Fibo fan lines support, otherwise the long term uptrend could resume and the world stock markets may challenge the May 2011 highs.

Zooming in through a daily chart below we notice a potential Head&Shoulders formation with a down sloping neck line that was broken, then tested thus the index being now theoretically prepared to drop to at least its H&S projected target that coincides with the second Fibo fan line support. A return above the neck line negates the bearish daily chart view.

If the drop towards the H&S projected target unfolds in the coming days and weeks, the world stock markets will remain under downward pressure.

Saturday, June 25, 2011

Markets Price to Moving Average Snapshot

German ZEW Survey Lowest since January 2009

The ZEW Indicator of Economic Sentiment is ascertained monthly. Up to 350 financial experts take part in the survey. The indicator reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic for the expected economic development in Germany in six months.

Sunday, June 19, 2011

S&P500 Top Formation

As noticed in a previous post in the beginning of May, "Sell in May and go away!" was a good advice once again. The updated weekly chart above shows the weekly breakout above 1350 was fake and reversed the week before starting a deeper correction and perhaps forming a long term top. We notice the index broke the uptrend coming from the 666 March 2009 lows. The break occurred on the logarithmic scale chart only but usually it precedes the break of the arithmetic scale chart (see below), as well.

The index halted around 1370 where are 76.4% (38.2% x 2) retracement of the fall from the 2007 highs to 2009 lows and 161.8% extension of summer 2010 correction. The internal symmetry is indicative of a potential long term top set in May 2011 which could trigger a deep correction targeting at least the 1000 area (2010 lows and 38.2% retracement of the 2007 - 2009 plunge), thus retracing half the 2009 - 2011 recovery until sometime in 2012.

The updated daily chart below shows the potential 5-wave count which may be completed and the correction that ensued by breaking the uptrend (coming from August 2010) around mid May, as discussed in the mentioned previous post. The correction has touched the targeted rising SMA200 and approached this year lows and the bottom of the corrective wave 4 located around 1250. A break down through this area is extremely bearish and seals a long term top at this May's top around 1370. Nevertheless, the index may stage a rebound preceding the important 1250 area break down while a return above 1350 would suggest the top is not yet in place.

US Philly FED Survey Slowdown Warning

Markets Price to Moving Average Snapshot

All stock market indexes are below SMA50 (medium term) and the majority is already below SMA200 (long term) except for the ones from Germany, Indonesia, Israel, Romania, Russia, South Korea and US.

Monday, June 13, 2011

US 10-year Treasury Yield Halts on Target?

As noted in a previous post, the US 10-year treasury yield started a downtrend that signaled turning points for the other asset classes (commodities, equities and the US dollar). In the updated weekly chart above and daily chart below we can see the two discussed targets, 3.05 - 3.10 area and 2.90 were sequentially reached around monthly cycle lines.

The consistent break of the 2.90 area this month could send the US 10-year treasury yield towards last year's low around 2.35 and could also keep pressure on equities and commodities while potentially pushing the dollar higher during the summer and year end. If the 2.90 area is holding this month then we could see summer relief rallies in equities and commodities and continuing dollar weakness at least until autumn or literally "fall" :).

Sunday, June 05, 2011

EURUSD Resumed Uptrend

The updated EURUSD daily chart above shows that the long term support area discussed in a previous post built the base for the renewed uptrend which set off right on the monthly cycle time. The next target should be the previous highs just below 1.50 and perhaps higher later on.

Nevertheless, we should check if the broken uptrend (now around 1.47) poses strong resistance. Failing to break higher could turn extremely bearish.

Markets Price to Moving Average Snapshot

US Macro Trends - Turning point?

TEL Breakout

TEL finally managed to break through the strong resistance around 22 with high volume and on cycle time, as noticed in the daily chart above. The obvious short term targets are roughly 23.5 (already touched) and 25 but the medium term target could be the area around 27.

In the daily chart below we have TEL relative to BETXT. We notice the breakout above SMA200 and through the downtrend around a double Fibonacci time zone area which sent TEL strongly overperforming the market.