Inter-market Technical Analysis using algorithmic pattern detection
WEDNESDAY JANUARY 13, 2010 06:31 ET
There were some sharp drops in Asian trading on Wednesday following the decision by the Bank of China to increase reserves from the banking system because it is becoming concerned about emerging evidence of property and asset bubbles.
The Shanghai Exchange ended with a more than 3% drop and the Hang Seng Index in Hong Kong fell back by 2.6%.
The chart below reveals the uncanny ability for key levels in Ichimoku cloud formations to act as support/resistance. The intraday low in today’s session tagged the base of the cloud formation almost exactly and should now offer some support. Notably the index also closed below its 50 day EMA.
The Nasdaq 100 (NDX) outperformed on the downside in yesterday’s US session but looks to be well supported at the level drawn on the chart.
As anticipated in my commentary from January 8th the semiconductor sector was one of the weakest sectors in yesterday’s trading.
TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY JANUARY 13, 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
GS The Goldman Sachs Group Inc.
Goldman Sachs (GS) has been displaying reversal behavior after breaking away from the descending wedge formation which I discussed for the investment banks earlier this week. This should be monitored closely as any continued weakness leading to a violation of the $160 level would suggest that the early January rally may have been a carefully orchestrated "fake-out".
AMD Advanced Micro Devices Inc.
Here is my comment on AMD from last week
Advanced Micro Devices (AMD) is a constituent of XSD and, unsurprisingly, is displaying similar characteristics to the sector fund.
ADBE Adobe Systems Incorporated
Adobe (ADBE) dropped below its 50 day EMA yesterday without evidence of any aggressive selling pressure.
GOOG Google Inc.
Google (GOOG) was also discussed here last week and again, as anticipated has retreated almost to its 50 day EMA where one would expect to find some buying support.
HSY Hershey Foods Corporation
Hershey (HSY) surged ahead yesterday breaking above a key trend line and all three moving averages on substantial volume. Follow through should be expected in coming sessions.