Wall Street finished mixed. I have been of the opinion that the rally since Christmas was an upslanting wedge that suggested sharply lower prices would occur once the pattern was complete. This morning I am starting to be just a little bit concerned that Wall Street wants to have one more attempt at the overhead resistance before beginning the next phase of the bear market. A couple of the charts are suggesting that trading this week might be a little flag pattern and if that is the case, then we would have to exercise patience while we push higher into the resistance from all of 2018 trading. Not changing my mind on the big picture but I was uneasy yesterday and was thinking that I needed a bit more time for some of my indicators to catch up and that feeling is a little stronger today.
Mind you, when I look at the chart of the Trannies, I think there is very little hope of a further rally. It has been particularly weak for some time and certainly does not fill one with any degree of confidence that we can do anything but head lower. But trying to balance the whole market, I think I might have to be a bit patient.
But on a more cheery note – another new high in Brazil but starting to finally look a wee bit overdone.
US dollar stronger and pushed higher into the overhead resistance of the past few months. Interestingly, it was the Euro that was taken out behind the shed and shot this time. However, the strength of the dollar left commodities mixed with gold continuing to ease back. Our major gold stocks continued to be sold off yesterday. I think we have to keep in mind that the sector got very overbought when the XGD ran through my target area up to the resistance from the top formed in 2016. I have suggested we would have to be patient here while the index corrected and still believe this is the case. As is fairly normal, the gold story is completely intertwined with the whole currency situation. I mentioned at the end of last week that it looked like “someone” wanted to take the gold price lower. Looking at where the price is sitting at the moment, I am just a bit concerned that “they” will have a go at breaking gold below the support around 1275/1280. Just be aware of the type of behaviour that goes on in this market.
If New York does rally further then we will do our normal trick of following on behind and rally as well but on this occasion I think we will need the banks to carry the load.
And on a lighter note – were you aware that there is an Obesity ETF in the US. Its code is SLIM – obviously someone with a sense of humour devised that one. Overhead resistance looks a bit, shall we say, over-weight…..
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