Inter-market Technical Analysis using algorithmic pattern detection
WEDNESDAY FEBRUARY 3, 2010 06:24 ET
There has been a snapback in the well orchestrated play of pro-commodities, pro-emerging markets, pro carry trade and dollar punishment accompanied by a better tone to equities. This is not surprising given the rather severe sell off which was seen in some of the more adventurous and riskier asset classes over the last two weeks.
The Rogers Commodity Index moved up by 2.5% in yesterday’s session (this index is tracked by the exchange traded fund, RJI)
I would expect a continuation up to the level indicated by an arrow on the chart which coincides with the 50 day EMA and the topping tail of the green cloud formation.
The Russell 2000 (RUT) faces a similar challenge at the intersection of its 50 day EMA and the continuation of the trendline (the dotted line) which was broken last week.
The price congestion at the 610 level suggests that there is a likelihood of another leg down to the 585 level in the intermediate term.
The Hang Seng Index in Hong Kong managed to rally nicely gaining 2.2% and is now approaching a zone of previous support at the 21,000 level which could now act as resistance.
TRADE OPPORTUNITIES/SETUPS FOR WEDNESDAY FEBRUARY 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
DHI D.R. Horton Inc.
In last Thursday's commentary I noted the following
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.
The stock staged an impressive rally of more than ten percent yesterday which actually sliced through the $12 level and brought us back towards the previous multi-period high from last September.
KBH KB Home
The following is from one of my commentaries from last week
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.
Yesterday's rally of more than six percent was not accompanied by the kind of volume which would expect on a major breakout and I would now retire to the sidelines on the homebuilding sector.
TIF Tiffany and Co.
Tiffany (TIF) looks vulnerable at the level indicated by the arrow (i.e. around $42.50) which shows the intersection of the 50 day EMA and the top of the cloud formation.
AET Aetna Inc.
Aetna (AET) also looks vulnerable to further downside action at the $31 level.
INSP InfoSpace Inc.
Infospace (INSP) has an intriguing pattern which looks like an overextended bull flag, but yesterday's move up on above average volume would tempt me for a short term play on the long side.