Thursday, 21 February 2013

ASX 200 back below 5000. Bull trap complete?

This morning when I posted the ASX 200's overnight hourly chart trend line break I knew it was important, but I didn't imagine that the market would be down so strongly today. The cash market closed at 4980, down from yesterday's close at 5099.  Now it is time to zoom out to the bigger picture. The daily chart (including after hours trade) suggests that closest possible trend line support is around 4950. A move below 4870 and return to the main trend channel would complete a huge throw-over and indicate even more weakness ahead. Maybe support will hold. Let's see. Keep an eye on Europe and the US.

Weekly chart next. Was the rally above 5000 a bull trap? Too early to call it, watch those daily chart trend lines. But don't rule it out.

S&P 500 now that trend line throw-over is complete, watch for swift move lower to confirm the wedge

The throw-over / false upside break indicates that the wedge is complete. A completed wedge should be followed by a swift decline. Patterns fail as often as not, but for now, watch for that swift decline. If it doesn't happen, we'll have to keep our eyes open and try to map any alternate as it unfolds. Daily chart first.

Weekly chart next. A decline below the lower wedge line at 1425ish would be a big hint that the 2007 peak will not be tested, and that the market has turned lower toward an eventual retest of the 2009 low. Don't rule it out! This market has been range bound all century, that 2007 peak was only points above the 2000 high.

DAX peaked in January, set to lead the way lower for global stocks?

The DAX has been a tricky one in recent days, showing a false downside break last week and this week a false upside break. A move to fresh lows for February would confirm a new down trend, and make it nigh on impossible for US and Aussie stocks to renew their recent levitations, as all three markets are rising and falling atop the same global ocean of confidence and US dollar liquidity. The bearish moving average cross indicates that the trend is down at this time frame, and for that to remain true, this week's high should not be challenged. Let's see.

EUR/USD breaks lower through trend line drawn from 2012 low, crucial confirmation of Undollar weakness

All of a sudden, market participants want USDs, happily exchanging anything and everything to get them. EUR/USD is late to the party, but its arrival is a huge confirmation of weakness in Undollars and hint that the weakness is only just beginning. 

ASX 200 breaks lower from hourly chart trend channel, looks to have completed throw-over from daily chart channel

Starting with the hourly, illustrating the break lower from the trend channel. Includes after hours trade, pointing to a lower open this morning by the cash index.

Zooming out still on the hourly.

Daily showing throw-over / false upside break.

S&P 500 completes throw-over from wedge and breaks lower from up trend channel

Still 20 minutes or so of trading remaining in New York, but looks like the wedge formation of the last few months has ended in a classic throw-over / false upside break, and barring a rally in the remainder of trade, the market has also broken lower through trend channel support.

Gold slices through trend channel support