Thursday, 18 June 2015

S&P 500 headed for another test of short term down trend line? Shaping for sharp rally?

I can't shake the feeling that before a big top is possible for the S&P 500 and US stocks, there must be a blow off top or a sharp move higher, with heightened levels of interest from the general public, or at least some sort of emotional climax among investors. Maybe I am wrong to be looking for a big top? Maybe a big top is already in place? In any case, trade a market's price action, not anyone's opinion.

The S&P looks to be rallying toward another test of the short term down trend line. A break higher would open the door for a strong move upwards, as periods of choppy trade in a market are always followed by trends.... eventually.

Gold rallies free of short term trend channel. Giant bull flag complete from 2011 top?

Daily chart shows Gold today rallying free from the recent down trend channel, and up through trend line resistance.

Zooming out next, as I haven't posted a long term chart of Gold for some time, and it's now at an interesting juncture.

Monthly chart shows that Gold has been trending lower in a channel from the 2011 high. Bullish MACDH divergence has warned for some months now of a rally, and that measure of momentum has now flipped to positive. Was the move lower from 2011 a giant bull flag? If so, has that pattern bottomed? Or will Gold continue to trend lower within the channel, maybe even accelerate lower from it? It is to early to answer those questions definitively, but asking them and exploring the possibilities keeps you ahead of most of the crowd.