Inter-market Technical Analysis using algorithmic pattern detection
MONDAY NOVEMBER 16, 2009 06:42 ET
The Nasdaq Composite (IXIC) closed Friday’s session at the 2167 level and now looks set to tackle the previous recent intraday high of 2190 from October 23rd.
Reviewing the simplified Ichimoku chart below it is quite remarkable how simple the pattern has been since the March low. Whenever the index has retreated to the green cloud, at which points it has also tagged the 50 day EMA, buying support has emerged to take the index higher.
It is hard to avoid the conclusion that this is a fundamentally up-trending market with underlying dynamics which suggest that the dips are persistently seen as buying opportunities. Until the evidence shifts on this interpretation those who conduct the occasional bearish raids on this and other equity indices will have to satisfy themselves with opportunistic gains if they cover quickly enough or losses if they become too passionate about their belief that this market is unsupported by the fundamentals.
Not being much of a believer in the notion that one can determine the "fundamental value" of equities, the simple adage that the trend is your friend captures the flavor of the rewards obtained by those who have taken the ride up since the piercing of the pink cloud in early April.
Similar comments to those made above can be applied to the Hang Seng Index in Hong Kong which seems to be headed towards the 24000 target discussed here last week. As is also evidenced by the accompanying chart, only once in early July has this index even pierced the green cloud, and, on every occasion when it has been tested, the 50 day EMA has provided immediate support.
In contradistinction to the analysis provided for the two charts above the KBW Banking Index (BKX) is one of the few of the major sector charts to reveal a drop below the green cloud.
TRADE OPPORTUNITIES/SETUPS FOR MONDAY NOVEMBER 16, 2009
The patterns identified below should be considered as indicative of eventual price direction in forthcoming trading sessions.
None of these setups should be seen as specifically opportune for the current trading session.
For a more comprehensive listing of price formations detected by our pattern recognition algorithms please visit TradeWithForm
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