Daily Form January 13, 2011

Inter-market Technical Analysis using algorithmic pattern detection

THURSDAY JANUARY 13, 2011       12:13:00 GMT

The S&P 500 broke to a new multi-year high above 1285 in yesterday’s session.
Two technical indicators are revealing on the weekly chart below.
1. The 50 week EMA is about to cross the 200 week EMA from below representing a weekly golden cross.
2. The price action has, during recent weeks been hugging the uppermost 40 week Bollinger band which is in stark contrast to the price action following the death cross i.e. where the 50 week EMA dropped below the 200 week EMA back in November 2008.

Also apparent on the chart is a zone of considerable price congestion during early 2008 between 1280 and approximately 1400 which suggests that whereas the underlying tone remains firmly positive the bulk of the rebound gains are now behind us.

EUR/USD rallied strongly yesterday following a carefully orchestrated Portuguese bond action (Monsieur Trichet should take a bow). Once the $1.3075 level was penetrated the trading mode was in favor of the long side and the euro managed to move swiftly back towards the next layer of resistance around $1.3150.
Current price activity is quite volatile and the next upside target will be approaching $1.32 and if that can be penetrated decisively major resistance at $1.3340 could be a valid intermediate term target.

TBT, which tracks the yield on the longer term US Treasury securities, appears to be consolidating in a handle like pattern to the larger cup formation and I would favor the long side in the intermediate term.

The municipal bond sector remains under pressure and as suggested yesterday in regard specifically to California municipal obligations this sector remains troublesome and rallies should be seen as selling opportunities.


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

IYT  iShares Dow Jones Transportation Average  

IYT, an ETF which tracks the DJ Transportation sector, displayed an NR7 and inside day pattern which can often be a precursor to a directional breakout.

CMVT  Comverse Technology Inc.  

Comverse Technology has a vulnerable looking chart pattern and yesterday's candlestick formation was an example of an evening star with substantial volume as the price sank into the cloud.