Inter-market Technical Analysis using algorithmic pattern detection
TUESDAY MARCH 8, 2011 12:09:00 GMT
FEZ, is the exchange traded SPDR for the EURO STOXX 50 index which includes a relatively large allocation (almost 25%) to large European financial services companies including major European banks.
While the index itself does not have a huge following, and the volume in the ETF averages only about 50,000 shares per day, the price action and volume performance of the sector fund do provide insight into the general appetite for large cap European equities.
The concern with the current pattern is that the index has been stalling in a plateau formation which is now beginning to roll over with clear negative divergence in the MFI chart segment.
France’s CAC 40 - which includes stocks such as Banque Paribas which are also included in the EURO STOXX 50 index considered above, is showing an interesting technical pattern.
The upward sloping dotted line has been violated and there are several recent candlesticks with longer upper tails suggesting clear overhead pressure.
The horizontal dotted line suggest a level of support which is found not too far from the top of the cloud formation - both of which would suggest that it is somewhat critical for this index to find buying support not far below yesterday’s close.
I shall repeat my view from the Daily Form commentary from February 22 nd - which can be found here - that the FTSE 100 index in the UK seems likely to retreat towards the 5800 level.
In particular the highlighted candlestick from January 31st with an intraday low of 5815 would seem to be a feasible target in coming sessions.
I am not finding too many interesting setups at present in the FX market - and am waiting on the sidelines with respect to EUR/USD especially, but the daily chart for CAD/CHF shows a fairly long established trading range/channel and I would be inclined to play the long side - this intuition would be strengthened by a break upwards above the pink cloud and specifically the 0.9630 level.
TRADE OPPORTUNITIES/SETUPS FOR TUESDAY MARCH 8, 2011
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
The Housing Index (HGX) has dropped below its 50 day EMA and shows technical weakness and a target around $105 now seems feasible over the medium term.
XSD SPDR Semiconductor ETF
Last week- and the link to the commentary can be found here, the suggestion was made that XSD, one of the two main ETF's for the semiconductor sector appeared to be ready to roll over and yesterday's 2.4% drop, along with the weak MFI and RSI readings could eventually trigger a fall to the $55 level at the base of the cloud formation.
KBE SPDR KBW Banks
KBE, which tracks the KBW Banking Index, and which was discussed here last week also seems vulnerable to further price erosion with a downside target in the vicinity of $25.