Saturday, 4 June 2011

Stocks down

Daily chart shows the S&P 500 has broken downwards out of the trend channel that contained its action for most of the past year. It may find support nearby current levels from the mid-April lows. The move down from the peak is choppy, and so far looks corrective. 

Stepping back to the weekly chart view of the past five years S&P 500 action, shows that we must be wary of overstating any bearish potential from the trend line break on the daily chart. The trend is up at weekly chart level.

This ASX 200 weekly candlestick chart includes the overnight action (Oz time) in the SPI. The market has broken the trend line formed from the low in early 2009, and also broken below its May low.  Below we will see that the Chinese & Indian markets have not yet broken below their May lows. I would have greater confidence in follow through from the Aussie break if weakness was reflected across the region and the US also.

China H-shares. The trend line is being tested, but the May low has held.

India was relatively strong this week.

The Japanese market has held below its trend line, but not broken below its May low.

AUD/USD Zzzzzz

It was a sleepy week for the AUD/USD, with no clear trend at this time, just choppy range bound trade. My analysis from last weekend still holds ie. if the AUD/USD breaks the May low at 1.0441, it has the potential to trend down for months and possibly years. Unless/until that low is taken out, we must respect the market's option to move broadly sideways, or perhaps test the early May high just above 1.10. If that May high is beaten, the AUD/USD will likely trend up in subsequent months. 

Silver and Gold

Silver hasn't followed through on the earlier trend line break. The trend at larger degree remains down, but until the low at 35.00 is broken, we must allow for for further consolidation before the next sustained move lower.  

Gold remains within a corrective looking trend channel, following the move down in early May. A move above last week's high at 1551 would make the corrective trend channel view incorrect. 


Í speculated earlier that the EUR/USD had bounced down from the rightmost trend line. Last night's action (Oz time) proved that to be wrong, as the EUR/USD powered higher. 

The hourly chart did a good job of keeping us out of any short trades, as the trend remained clearly up. There is now a possible throw over developing, of the top up trend channel line.