Inter-market Technical Analysis using algorithmic pattern detection
THURSDAY JUNE 17, 2010 07:09 ET
The S&P 500 managed to tip its hand in favor of the bulls as it pushed decisvely above the 1100 level in Tuesday’s session and now seems to be ready to confront another key test at 1120 which is the level of the 50 day EMA which is just above the highlighted doji/hanging man hybrid candlestick formation which resulted from yesterday's trading.
My intuition is that there has not been a lot of enthusiasm behind the move up from the 1040 level, which itself was not really tested robustly, and that much of the move has been motivated by the relentless retreat of over zealous short sellers when they smelled blood earlier in June.
Nonetheless the short side of equities for the time being is likely to remain frustrating and I would only commit new funds to the short side of the S&P futures on a closing break below 1080.
EUR/CHF is retreating to its lowest ever levels since the advent of the single currency and the long side has the characteristics of a relatively attractive risk/reward ratio.
The Australian dollar -AUD/USD - seems to have stalled at current levels and the recent peek below the trend-line indicated on the chart and the cloud formation, could portend the beginning of a corrective move following the sharp rally since the late May and early June lows.
TRADE OPPORTUNITIES/SETUPS FOR THURSDAY JUNE 17, 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
ACWI iShares MSCI ACWI Index
ACWI, is an exchange traded fund which tracks the MSCI All Country World index, and was discussed in Tuesday's column. Yesterday's close is still located at the point where the 50 day EMA has intersected with the 200 day EMA.
As one of the broadest asset indices this chart indicates that the current market environment is one where the longer term direction for equities remains at a cross roads.
MHP The McGraw-Hill Companies Inc.
McGraw Hill (MHP) is likely to make a little more progress to the upside but I would suggest exiting at the point indicated by the arrow.
XES Oil and Gas Equipment Services ETF
XES, an exchange traded fund for the Oil and Gas Equipment Sector, has also rallied exactly to the death cross level and expecting further upward progress in the near term, if one happens to be long this fund, looks risky.
TTWO Take-Two Interactive Sft.
TTWO registered a doji star as it attempted to move above the cloud formation in yesterday's trading and, in the context of the recent steep drop on very heavy volume, the suspicion is that the pullback phase may be completing in the near term.
HAL Halliburton Company
Haliburton (HAL) has a fairly well defined bear flag pattern.
EWY iShares MSCI South Korea Index
Of the many geographical sector funds which are tracked daily, EWY, which tracks the MSCI South Korea index, has a more positive tone than most. The Kijun Sen moved above the Tenkan Sen yesterday (for Ichimoku aficonados, there are explanations of all of these terms available with our premium subscription service) and the $49 level would seem like a feasible near term target for 50% with a trailing stop on the remaining 50 long position.