Inter-market Technical Analysis using algorithmic pattern detection
WEDNESDAY MARCH 3, 2010 06:58 ET
Following my comments from yesterday regarding the need for SPY to convincingly move above the cloud formation after the promising development from Monday’s session of breaking above the 62% retracement level, the pattern registered in yesterday’s session, which despite being above the cloud, perhaps raises more doubts than it resolves.
The small red star formation- again on light volume - reflects the cautious nature of sentiment at present with a moderate bias favoring the bullish case for equities. The NFP number on Friday is clearly a hurdle that the market needs to cross - although as in recent months traders may decide to position themselves defensively ahead of the actual release of the number.
The exchange traded fund GLD made good progress yesterday and is now approaching a significant test of overhead resistance at the 112.50 level on the ETF.
On spot gold, I would suggest that a break above $1150 would open the way to a re-test of the $1225 level.
USD/CHF could be vulnerable to setback to the 1.055 level as illustrated on the chart below.
TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY MARCH 3, 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
GE General Electric Company
GE has been confined within a narrow range for some time and I shall be paying attention today to see if there is any follow through to yesterday's doji formation which also registered a close just below the cloud formation and the 50 day EMA, as these may be a precursor to weakness ahead.
JCP J.C. Penney Company Inc.
Yesterday's break above the cloud on strong volume, which validates the recent breakout above the downward trend which took place in mid-February, suggests that J C Penney (JCP) has plenty of upside potential in the intermediate term.
SCHW The Charles Schwab Corp.
The pattern for Charles Schwab (SCHW) meets the required characteristics of a bull flag formation which has pulled back to a zone where new buying interest could emerge.