Thursday, 11 December 2014

ASX 200 down trend continues

Daily chart shows that the trend is down, no matter how you look at it, either through the lens of trend lines or moving averages. Will we see a Santa Claus rally? I have no idea, but betting against the trend is not a winning proposition in the long term.

Weekly chart moving averages indicate that the larger degree trend is also down.Trade this week has been unusual in that it has broken both the high and low of the previous week. Monday's upside break proved false. The trend suggests that today's false downside break will not remain false for long.

Monthly chart illustrates my view on the most likely Elliott Wave count and scenario. This will remain the top scenario unless the weekly trend turns up.

S&P 500 bursts below trend line support

Daily chart shows the S&P bursting below trend line support. Will we see a Santa Claus rally? Perhaps but upside potential appears limited, first by that nearby trend line line resistance, and also by the position of the market on longer term charts.

Weekly chart shows that the turn lower began at the top of the trend channel drawn from the 2011 low, meaning that the rally is stretched. Yes, the rally could remain stretched and even stretch further, but every rally has its limit. And like a rubber band, when the limit is reached, the subsequent action can be spectacular.

Gold testing dual trend line resistance, longer term charts show potential for further rally

Daily chart shows Gold testing dual trend line resistance.

Weekly chart shows Gold rallying from trend line support with plenty of room to rally before mid channel resistance is tested. Though first, daily chart trend line resistance must be beaten, and then the October high just below 1260.

Monthly chart shows that Gold may (may) have hit the low point of a bullish flag at the November low, implying that the recent rally is the beginning of a move back toward record highs. That scenario is low probability right now, but further rally would raise the odds.