I have a view that the Dow is close to peaking and is now in a confirmed rising flag pattern formed by the last 9 weeks, normally (but not always) a reversal. Still a bit of headroom to move a few hundred points higher but we seem to be in the zone now for a top.
I’ve taken the opportunity though to set a short in Macquarie Bank today, after doing little trading for the past two months. Weekly chart below shows multiple signals of at least a short term top.
Firstly, strong overhead resistance at $83.50 was a target for the past few months. Wasn’t sure MQG would get there, but hit it yesterday. This also occurred in Week 10. I’ve done a lot of timing work on counter-trends, which at a stretch last 9, 10 or 11weeks. This is not a CT, but nevertheless this swing at 10 weeks is looking a bit dated. Also hitting the 88.6% retrace yesterday is a third signal for a top.
I don’t normally place a lot of weight on channels, but in this case it’s pretty well defined and top of the channel is coinciding with my other tools. There are also 5 swings up in the move which is an Elliott subwave count. Finally the individual weekly bar this week looks like opening and closing low, although still one day to go.
All in all, it’s time to go short on MQG. Even if the uptrend was to continue it should at least pull back into the channel for 3 weeks or so which gives me a position through the Fed meeting on the 21st Sept and into early Oct to see the lay of the land.
FMG: hit my long held $5.20 target yesterday and reversed. I took some of the funds I had intended for the MQG short position above and added a small short position in FMG, more just to spread some risk as I’m playing an overall market view mostly, although I’m not so sure of this position. I prefer multiple tools giving signals on the chart. FMG has probably peaked for the moment but less certain of how much of a pullback we’ll get.
BHP: Charts posted in August showing it hit a target retrace I set back in December 2015. Link http://hotcopper.com.au/posts/18726207/single. September monthly shows an inside bar so far and still sitting below my monthly orange downtrend line so supporting last months $21.57 being the peak of this move.
SHL: I’ve had a short on this for a few months. Finally coming my way today now that it’s gone ex div.
Overall, lots of signs looking at charts of some of the bigger stocks on the ASX that a good reversal is due.
(20min delay)