Daily Form January 29, 2010


Inter-market Technical Analysis using algorithmic pattern detection


FRIDAY JANUARY 29, 2010       05:58 ET




One week ago I wrote in this column the following:

The chart configuration suggests that a follow through to yesterday’s weakness should eventually lead to a re-test of the 1085 level.

The daily commentaries are archived and the actual reference can be found here .
As can be seen from the chart below we slipped below the 1080 level during yesterday’s session instead of finding a firm bounce at 1080 which would tend to be the case if institutions were keen to keep buying the dips.
I would suggest that the tone of the market is changing and what were once seen as entry opportunities i.e. where the index was approaching areas of support, are no longer acting that way.
There is also other evidence on individual stock chart patterns that traders are looking rather for moves back to resistance as entry opportunities on the short side.
My best estimation is that we could see a rebound from current levels - in order to wash out a lot of the value in the put premiums that fund managers have been willing to pay up over the last few sessions - but once the anxiety has dissipated somewhat and as more upbeat talk about the economic recovery starts to be heard again, the next target for the short sellers will be the 1040 level.
Although I would not place the likelihood as very high, there is a not insignificant chance that the pattern from here could begin to resemble a series of bear flag formations in a downward staircase pattern.



The performance of the DAX index in Germany in many ways characterized the session as I described in my daily blog. There is actually a good graphic of a classic case of "gap and trap" visible on the 15 minute chart which is available here

The 15 minute chart for today’s DAX shows just how easy it is to get stranded when piling into a strong opening gap. Too many intraday punters were anxious to get on board and ride with the feel good factor this morning in European trading. President Obama took a rest from bank bashing in his state of the union speech last night, Asian equities rose overnight and there were plenty of positive vibes about Apple’s iPad.

As a result of yesterday’s performance there is a large red engulfing candle and the index is now 9% from its intraday high registered on January 11th. As a result it seems probable that the bulls may be nervous enough to allow the market to drift back to a re-test the November 27th low, especially as it quite notable that the uptrend line drawn on the chart has been clearly violated.




In Asian trading the Nikkei 225 gave back more than 2%.
The chart reveals that the dynamics which were largely government sponsored of supporting the Japanese markets (bond and equities) when the Nikkei looked perilously like slicing through the critical 9000 level in November may not be gaining as much traction as hoped.
The current level looks to be fairly well supported but the drop out of the rising wedge pattern is cause for concern as is the tendency of the yen to rise against the dollar when risk aversion moves back to center stage as it has been doing this week.



The euro has spent the last 24 hours below the $1.40 level which had previously acted as a psychological support level, even though technically it was less critical than the $1.4180 level discussed here recently.
As the intraday chart reveals the Eurozone currency is now finding that rising above the 50 period EMA - the red line on the chart - and the Ichimoku cloud formation is proving to be a major hurdle.
If, as I suspect we can make it back above the $1.40 level and even make progress towards $1.4160 would present a good entry opportunity for the short side with an eventual target of $1.3820.


Daily Form January 28, 2010


Inter-market Technical Analysis using algorithmic pattern detection


THURSDAY JANUARY 28, 2010       07:01 ET




Asian markets managed to get a bounce overnight which has been attributed to the fact that President Obama didn’t continue his bank bashing theme in his state of the union address. Also Europe got off to a good start with Germany’s DAX seeing a 1% plus opening gap but as the hourly chart reveals the feel good factor has not lasted very long and as this is being written the index is fading back towards yesterday’s levels.

One thing which caught my eye from the Davos conference was an explicit warning from Bob Diamond who runs Barclays that large indebted governments (i.e. most of the so-called rich countries!) would be unwise to restrict proprietary trading and limit the size of the larger banks as that could seriously jeopardize those government’s chances of selling all of their bonds. So far from moral hazard we now have another catch 22 on the horizon which further underlines my contention that US politicians, including Mr. Obama, have one posture of righteous indignation with the financial elite designed to play well with Homer Simpson et al., but their eyes are also firmly fixed on the trajectory of the capital markets. Rocking the boat too much could lead to a nasty capsizing in which a lot of people would get wet and many might drown.



In European trading Thursday the euro is flirting with the $1.40 level and during Asian trading fell as low as $1.3935. Just to remind readers of the chart from last week - the target for the next week or so is $1.38 -the point indicated by the arrow on the chart below.



Here again is my comment form Tuesday’s commentary.

The tide appears to be turning in favor of dollar bulls or perhaps more accurately it would be better to say that it is turning against the huge number of dollar bears.
Watch the USD/CHF cross rate for a possible break above 1.0540 which would be a strong buy signal for the US currency against the Swiss Franc.

We have come tantalizingly close to the break through but I would wait for a clear and decisive move and there is no hurry to get on board as the longer term wave pattern suggests that there could be scope for a sustained and substantial move from current levels.






TRADE OPPORTUNITIES/SETUPS FOR THURSDAY JANUARY 28, 2010


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





DHI  D.R. Horton Inc.  

D R Horton (DHI) has found support at the top of the pink cloud and could be set for a revisit to the $12 level.




TSO  Tesoro Corporation  

Tesoro (TSO) registered a notable hammer candlestick at the bottom of the cloud formation and may be set for a bounce from current levels.




KBH  KB Home  

The chart for homemaker KBH looks constructive on the long side with a bullish pullback pattern and evidence that the cloud formation proved supportive with yesterday's move up on above average volume.




WSM  Williams-Sonoma Inc  

Williams Sonoma (WSM) looks vulnerable from an Ichimoku perspective and a bear flag appears to be evolving.



Daily Form January 26, 2010


Inter-market Technical Analysis using algorithmic pattern detection


TUESDAY JANUARY 26, 2010       05:58 ET




Continuing with the theme from last week’s commentaries, amidst all of the hyperbole and noise that has followed in the wake of the Obama/Volcker initiative, there has been a tendency to overlook the consequences for the financial economy of a less accommodating Chinese monetary stance.
Traders in the Hang Seng have not been so distracted from this and clobbered the index with an almost 500 point or 2.5% fall in Asian trading. Having taken out support at 21,000 there are further layers of minor support at 20,000 but if this does not hold there could be a much nastier fall ahead.



The chart for the Nasdaq Composite (NDX) reveals classical symptoms of negative divergences between price which had reached a plateau and an obviously downward sloping RSI slope with associated weakness and a crossover on the MACD chart. These indicators are not always reliable but notice should be taken of them especially when an index or security is at a multi-period high.
This is one of the technical patterns which I focus on in my TA workshops, more of which are being scheduled during H1, 2010 and for which details will be publicized here in coming weeks.



The FX markets are moving fairly decisively this morning in European trading. Sterling is doing what it does best which is to fall against almost everything after the UK government announced that the country has finally exited its recession but with a disappointing 0.1% growth figure for the last quarter of 2009.
Despite much more cheerful forecasts from many UK economists and pundits the actual number is hardly an occasion for celebration.
The tide appears to be turning in favor of dollar bulls or perhaps more accurately it would be better to say that it is turning against the huge number of dollar bears.
Watch the USD/CHF cross rate for a possible break above 1.0540 which would be a strong buy signal for the US currency against the Swiss Franc.



As commented here before the exception which could prove the rule for US dollar strength and which underlines the growing risk aversion theme which is now becoming far more visible in inter-market alignments, is the strength of the Japanese yen.
The long term weekly chart for the USD/JPY pair shows a remarkably persistent descending wedge pattern which is bearish. However a break above the hypotenuse to the right angled triangle would be a game changer for this pair, and whilst I am not predicting it in the immediate future, the yen seems to be increasingly overextended given the poor state of the Japanese public finances and with a negative outlook being registered today by S&P for the sovereign debt of the second largest economy in the world.






TRADE OPPORTUNITIES/SETUPS FOR TUESDAY JANUARY 26, 2010


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





AUD/USD    

From my twitter account yesterday I alerted that the AUD/USD looked ready to break down from the triangular pattern evident on the chart below. Giving further plausibility to that opinion was the rolling top pattern which is clearly visible on the 240 minute chart. Trading in Asia overnight saw the breakdown occur and yet again the weakness in the Aussie currency underlines the fallout from the Chinese more restrictive monetary policy and the diminution in the appetite for risk assets in general.
A re-test of lows seen in December now seems likely.



Daily Form January 25, 2010


Inter-market Technical Analysis using algorithmic pattern detection


MONDAY JANUARY 25, 2010       06:03 ET




Last week the markets were unsettled by a number of developments ranging from evidence of a tighter monetary policy in China, continuing concerns about Greece and the PIGS in general, but most importantly by the impromptu press briefing from President Obama regarding the Volcker initiative.
The S&P 500 sold off hard on the week and closed at 1091 which was just six points from the 1085 target which I discussed here last week. As of this writing on Monday morning European time, the Armageddon merchants will have been disappointed to see that Asia and Europe did not go into freefall and I suspect that the reasoning behind this apparent calmness has to do with the fact that Ben Bernanke looks to be secure in terms of his re-nomination.

Whether the Bernanke re-confirmation is sufficient to maintain a bid for US equities remains to be seen but there are other technical reasons to suspect that the tide is turning towards a sizable correction. Perhaps most importantly there are, on many charts, failures at re-test of late 2009 highs and the selling has been accompanied by much higher volume than the anemic volume patterns witnessed during the drift up in early January.

A plausible scenario in the coming week or two is that we will need to test the 1040 area which as illustrated on the chart is a line of previous support/resistance and also marks the 200 day EMA.

Returning to Obama’s new found affection for Paul Volcker for one moment, I suspect that no matter how much this initiative gets diluted and that the usual suspects try to circumvent the impact of the restrictions, there will be considerably less proprietary trading by US based institutions. The real measure of success will be whether it causes a wave of re-structuring and downsizing amongst the major banks. If it does it will have achieved a lot.



The KBW Banking Index (BKX) failed to break above $49 and registered a shooting star last week. This sets up the potential for a re-visit to neckline support around $42.
There is already a huge amount of "noise" developing in the commentary regarding the Volcker initiative and the bankers will clearly want to exploit this to muddy the waters. One wedge that will be used by the banking lobbyists, many of whom are gathering in Davos, Switzerland this week, will be their argument that the US initiative has not been "coordinated" with other G20 nations.

UK press coverage over the weekend about the announcement from Obama last Thursday (especially from Murdoch’s Sunday Times) was keen to point out a "split" between Washington and London over the agenda.

Divide and rule (for the banks) is alive and well!



The stripped down chart below which simply shows the Ichimoku cloud patterns and violation of an obvious trend-line dating back to last July’s lows, shows that EWZ, as anticipated here a week ago, is now in a corrective mode that could see a sizable retreat until real buying support emerges.
At first glance the $60 level - which would see a further 10% move down - seems like a feasible target.



There were a lot of institutional investors and proprietary trading desks exiting the junk bond sector last week, and the sector fund HYG, seems set to test the upper and probably lower limits of the cloud formation below.






TRADE OPPORTUNITIES/SETUPS FOR MONDAY JANUARY 25, 2010


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





KOL  Market Vectors Coal ETF  

A sector fund for coal related businesses, KOL, could be headed to the $32 level.




JPM  JPMorgan Chase and Co.  

The chart for JP Morgan Chase (JPM) looks decidedly negative and the break of the $40 level on two days of very sizable volume, in conjunction with a pattern which resembles a head and shoulders, suggests that a lot of institutions want out of this sector.
A recent blog posting addresses the issue of the so-called Volcker rule and I include it as background commentary


One of the reasons why the big players like JPM have been so successful at proprietary trading is just the sheer weight of the money that they can play with and their ability to move markets the way they have wanted them to move by aggressive and leveraged position taking with a safety net supplied courtesy of future generations of US taxpayers.

If the process of splitting off separate trading desks and migration of prop trading to the existing hedge funds proceeds it will result, relatively speaking, with smaller and less strategically vital firms in this area. Somewhat smaller firms will have smaller footprints and will be less able to persuade (and intimidate) other traders into seeing the wisdom of their directional bets.

In addition there may be less appetite from "sophisticated investors" to pledge capital to institutions/funds which are less obviously in the category of "systemically too connected to fail"

If one takes Obama's relish for a fight with the banks at face value (admittedly not a great idea with any politician!) there is an implicit repudiation of the notion that the taxpayer will bail out further examples of egregious risk taking, and may be it is better not to spell that out any further.





COF  Capital One Financial Corp.  

In Friday's sell off some big casualties other than the banks included companies exposed to the demise of the US consumer and the accompanying write-offs in consumer credit. Apart from American Express one of the uglier charts is the one below for Capital One Financial (COF).
Volume was three times the daily average (based on the last 15 sessions) and the stock last more than 12%. The peek below the cloud, but with a possible re-test suggests that the shorts should be wary in the near term but be watching for further evidence that the support level around $37.50 may be more decisively broken in coming sessions.




SYNA  Synaptics Incorporated  

The chart for Synaptics (SYNA) provides an excellent example of a rarely seen candlestick pattern a doji shooting star. If it was close to a multi-period high this pattern would best be described as a gravestone doji but occurring as it does on three time daily volume and coinciding with potential cloud support this could well be a reversal candidate in today's session.




BIK  SPDR S and P BRIC 40  

Although I have expressed recently misgivings about the bundling together of such disparate economies as Russia and India under the moniker of the BRIC's the chart below is compelling in its own right.
Keeping the technical indicators to a minimum and using violation of trendlines and cloud formations as the major signal trigger this sector fund could well see the $22 level in coming sessions.



Daily Form January 22, 2010


Inter-market Technical Analysis using algorithmic pattern detection


FRIDAY JANUARY 22, 2010       03:20 ET




At approximately 11.40 Washington time the President of the United States, standing tall with the eminence grise and ex Fed Chairman, Paul Volcker, standing beside him and looking even taller, declared an end to the cosy relationship between the US government and Goldman Sachs. Or did he?

On the one hand the trauma of losing the senate seat in Massachusetts may well have helped to focus his mind on the need to finally appear to the American public that they had not voted for a complete business as usual opportunist in November 2008, on the other does he really relish a fight with those on Wall Street who could be extremely nasty and devious adversaries.

There is some wiggle room in the wording of the statement regarding the restrictions on being able to benefit from the FDIC security blanket and at the same time engage in casino capitalism, but the President sounded as though he was spoiling for a fight and appearances and symbolism at the US presidential level are everything.

If Mr Obama has to kiss and make up too soon with the former investment banks it will become more and more obvious to the global financial community that the head of the world’s largest debtor nation but still the axis of the financial system is, to use a quaint American expression, all hat and no cattle. If on the other hand, the confrontational dynamics take on a momentum of their own, the dislocations and repercussions to the way that global finance is conducted could turn very ugly.

One by-product, which a cynic could even suggest was not entirely unintended, is that there could be more investors who find the safety of US Treasury bonds more appealing than the risk assets which have been propped up since March 2009 by the liquidity provisioning of the likes of Goldman Sachs.

While reflecting on the rather momentous announcement just over an hour ago there is a tendency to question - did I really hear that right?

Let’s see whether Wall Street (using that term as loosely as one uses Hollywood to describe the entertainment world) will be able to sneak into the inner sanctum of the Obama White House again through the back door, or perhaps I really did mis-perceive the significance of the event, and that nothing of any great consequence really was announced.



Asian and European markets were also hit by the surprising defiance of the Obama/Volcker initiative. In Asia the Nikkei dropped about 2.5% but the Hang Seng managed to regain some strength in late trading.
The S&P 500 dropped back almost 2% and came to rest more or less at the 50 day EMA.
The chart configuration suggests that a follow through to yesterday’s weakness should eventually lead to a re-test of the 1085 level.



During the early part of North American trading the Australian dollar appeared to be in free fall against the US dollar. The recovery indicated on the 240 minute chart captured as this is being written may well have run its course.



After increasing signs of investor complacency the VIX shot up by almost 20% in yesterday’s session.






TRADE OPPORTUNITIES/SETUPS FOR FRIDAY JANUARY 22, 2010


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





IYM  iShares Dow Jones US Basic Materials  

IYM, the basic resources sector fund was one of the larger non-financial victims yesterday as discussed earlier this week.




EWZ  iShares MSCI Brazil Index  

EWZ, the sector fund which tracks the MSCI Brazil Index, also discussed in Monday's commentary has dropped more than six percent this week.



Daily Form January 21, 2010


Inter-market Technical Analysis using algorithmic pattern detection


THURSDAY JANUARY 21, 2010       06:52 ET




The chart for the euro is beginning to take on the appearance of a waterfall.
Yield spreads with respect to German bunds on Greek, Spanish, Portuguese and Italian sovereign debt are surging and there are growing concerns that the time to pay the piper has arrived. The relaxed manner in which many policy makers continue to talk about how easy it is going to be to finance the gargantuan amounts of sovereign debt that will have to be sold for years to come, is starting to sound about as convincing as promises made about radical change in the US under the slogan "Yes we can".
There are a lot of opportunistic shorts that will scramble to cover as and when there are soothing statements put out by the ECB and Eurozone officials but in a world which is still massively short the dollar any significant rally in the euro should be seen as a selling opportunity.
$1.38 looks feasible a lot sooner than I thought.



As a follow up to my chart on Monday of the Bovespa Index in Brazil and the discussion during an appearance on CNBC’s European Closing Bell that same afternoon, the call on a potential topping out pattern could be unfolding. The index has fallen back to the 50 day EMA and it will be critical in the next couple of sessions to see whether, as when this has happened previously, the BRIC enthusiasts can rescue the index from what could well turn into a 20% correction as mentioned in Monday’s discussion.



The last two hours of trading saw the Hang Seng Index drop like a stone with a 2% loss for the session.
The 21000 level discussed here yesterday did not provide support and a key trend-line back to the July low has now been violated.
The goldilocks story on the Chinese economy is starting to look somewhat tarnished and the more the Chinese authorities look serious about combating potential inflationary issues (especially domestic asset inflation in the form of ridiculous prices for high end real estate) the more it appears that the punchbowl is being removed from the emerging markets party.



US equities look a little less stretched at present than those just reviewed in the hot money markets of Asia and Latin America.
What concerns me somewhat about the chart for Nasdaq Composite Index below is that the volatility bands are constricting suggesting that a large move may be imminent, and given the backdrop of a potential sovereign bond crisis in parts of Europe and a deterioration in sentiment from China, it is slightly problematic to assume that the breakout will be upwards.
However one should never under-estimate the capacity to support current asset values in the US from the powers that be.


Daily Form January 20, 2010


Inter-market Technical Analysis using algorithmic pattern detection


WEDNESDAY JANUARY 20, 2010       06:38 ET




In my commentaries in late December I expressed the view that the euro would eventually test the $1.4180 level which represented a key support level based upon the Ichimoku cloud pattern evident on the weekly charts at that time.
In trading in Europe on Wednesday morning we have pierced that level, and as anxieties about the situation in Greece appear to be increasing, the currency now seems headed - in the intermediate term - for a test of the $1.38 level which as can be seen on the chart is the next level of cloud support moving forward. Meanwhile, sterling is showing some resilience at present and while I have scratched my long EUR/GBP position, I would keep an eye on the UK currency over the next 24 hours for a potential setup of selling the pound against the US dollar as well, rather than against the Eurozone currency.



The Australian dollar is at a key support level against the US dollar as there is a formation which suggests that the current level is the neckline of a head and shoulders pattern on the 240 minute chart as well as the base of the green cloud formation.
As this is being written the Aussie currency appears to be slicing through this level of support which could presage a more substantial correction. Across the FX market this morning there are growing signs of risk aversion patterns, which could be a precursor to a more defensive posture in the US equity market as the day progresses.



Another of my recent anticipations with respect to the Hong Kong market was almost fulfilled in Asian trading as the Hang Seng is now set for a test of the 21000 level. The focus is very much on the growing evidence that the Chinese authorities are beginning to tighten monetary conditions as a precautionary move towards bubbles that are emerging in real estate in Shanghai and Hong Kong.



IYM, an exchange traded fund which represents the basic and industrial materials sector is showing evidence of dissipating momentum and the risk/reward ratio, I would suggest, favors looking for an advantageous entry on the short side in coming sessions.


Daily Form January 18, 2010


Inter-market Technical Analysis using algorithmic pattern detection


MONDAY JANUARY 18, 2010       07:42 ET




Although it is a public holiday in the US today - Martin Luther King day - and normally I would not publish a daily column I thought it might be worth sharing the following three "Big Picture" charts developed for an appearance this afternoon - Monday 16.30 pm London time - on CNBC’s European Closing Bell .

Essentially these represent intermediate term views on three different markets and are based primarily upon technical characteristics but intermingled are some thoughts based on my concerns about the overweighting which asset allocators are giving to emerging markets in particular.

The Bovespa Index in Brazil has one of the most pronounced "V" formations of any of the major global equity indices. As can be seen on the chart last Friday’s close is venturing back towards the 72,500 level which represented the highest weekly close from May 2008. The upper Bollinger Band is almost perfectly located at this level suggesting that recent volatility dynamics could make this a target in the relatively near term. However as the RSI indicators are suggesting there is some dissipation in the momentum/energy for the moves ahead and I would suggest that if we reach back towards the May 2008 highs there is a growing probability that a correction would arise (somewhat similar to the double top seen in the US markets in 2007) and a revisit to the 58,000 level would be a reasonable technical target.



On a related theme, and somewhat inspired by a column in today’s Financial Times by Martin Wolf, there is developing a tendency to lump together all of the emerging markets under the BRIC moniker which is a meme that has been planted in the popular consciousness by Goldman Sachs and specifically Jim O’Neill.

While undoubtedly there are good economic conditions ahead for much of the emerging world, there is a danger in not differentiating sufficiently between the prospects of each. China is a very different economy to both Brazil, as discussed above and also Russia. The Indian economy itself has particular challenges ahead as the inflation genie appears to be out of the bottle as is also the case in China.

The best play for the Russian market for the typical investor is the popular ETF, the Market Sectors Russia fund, which trades under the symbol RSX. Once again there is evidence on the weekly chart that the RSI and MFI are showing negative divergences with recent price activity. The fact that the weekly closes have moved above the pink cloud is a positive from a technical perspective but a setback to the dotted line of support/resistance drawn on the chart would put the index back into the cloud formation. The projected cloud moving 26 weeeks forward (not shown), which has an upward bias may also will act as a source of price resistance. In the intermediate term this index has the characteristics which suggest a 15-20% correction could be forthcoming.



The third chart which I intend to discuss on the CNBC slot this afternoon is one which I have featured recently in some technical analysis workshops that I presented in London in conjunction with Thomson/Reuters.

The chart takes a long term view of the USD/CHF exchange rate and I have annotated the chart with, what I believe to be is a convincing Elliot Wave diagnosis of the weakness in the US dollar stemming from the Nasdaq collapse and all of the bubble shenanigans of the last decade where the Federal Reserve has done its utmost to reflate the US markets at the expense of dollar debasement.

If the count is correct then we should expect a C wave to develop in the coming months which would support my general view that 2010 will, at least in the first half, see a stronger US dollar.


Daily Form January 15, 2010


Inter-market Technical Analysis using algorithmic pattern detection


FRIDAY JANUARY 15, 2010       03:44 ET




Equities have continued their gradual ascent and the S&P 500 managed to establish an intraday print above 1150 in yesterday’s session. The index closed at 1148.46 for a marginal improvement on its multi-month high achieved in Monday’s session and still the bulls seem to retain their control of the agenda.
In FX trading there has been a resumption of US dollar weakness - although the euro remains somewhat fragilely poised as discussed below. One of the most interesting pairs is the US Dollar versus the Japanese yen - USD/JPY - which as the chart reveals is approaching a fundamental support level in the context of a descending triangle. There has been a violation of the uptrend line drawn on the chart for the latter part of 2009 and a break below 90.40 would suggest that a return towards the 88.50 level could be back in play.



The 240 minute EUR/USD chart reveals some noticeable negative divergences on the RSI segment and the Eurozone currency is once again revealing signs of weakness. From the Ichimoku cloud perspective the absence of a relatively thick cloud support layer suggests that if the euro does not find support at the $1.4350 level it could sink rather quickly back towards recent lows in the 1.42 area.



The chart for the exchange traded fund for the gold mining sector, GDX, has produced a positive Ichimoku crossover within the cloud formation and also a notable hammer formation which tagged the base of the cloud and the 50 day EMA. The metal itself seems to be treading water at present although there are intraday patterns which resemble the cup and handle pattern which preceded the major breakout in early October.
At present I would keep an eye on the mining sector for entry opportunities on the long side but I remain neutral in the near term on spot gold with a longer term bullish bias.



COW is an exchange traded fund which is designed to reflect the performance of livestock. The index is composed of two futures contracts, lean hogs and live cattle.
The pattern has a bullish wedge formation and a break out from the current levels would point to a revisit to the $30 level.






TRADE OPPORTUNITIES/SETUPS FOR FRIDAY JANUARY 15, 2010


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





BSX  Boston Scientific Corp.  

Boston Scientific (BSX) moved up by 3.9% yesterday on above average volume and has emerged from the pink cloud formation suggesting that key overhead resistance has been overcome.




CPSL  China Precision Steel Inc.  

China Precision Steel (CPSL) has a bullish flag formation and the close yesterday coincided with the 50 day EMA as well as the base of the Ichimoku cloud formation.




EBAY  eBay Inc.  

The chart for EBAY shows technical weakness as the stock broke below its 50 day EMA on an uptick in volume and has also broken below the cloud formation.




IGT  International Game Tech.  

International Game Technology (IGT) has the mirror image characteristics to those seen for EBAY and a target of $22 at least now seems feasible.




CTV  Commscope Inc  

CommScope (CTV) is also revealing technical strength and has broken above a descending trend-line through highs extending back to mid September (not illustrated).




NFLX  Netflix Inc.  

Having broken below the green cloud formation on substantial volume, Netflix (NFLX) could now be headed for a test of support/resistance at the $48 level.