Is it all too perfect? The S&P got to within two points of my rally target. I have two options here – the first being that we turn tail and head south again or….we stuff around in all the overhead resistance for a while just to make everything appear a little more doubtful and not so clear-cut. I think I favour the second alternative but at the end of the day I still give very little chance that the market could prove to us that the bull market did not end on Wall Street in September last year.
There are a couple of possible positives that we need to keep an eye on. The first one is that the S&P did take in my first target to the downside (exceeded) which was the count from the top pattern. The second is that a couple of my longer term indicators gave buy signals – they don’t do that very often. However, we have had a super rally since then which should be sufficient to placate both these facts but….still need to keep an open mind.
The US dollar a little bit stronger and so was the Aussie and the Kiwi – told you they are mad in the currency pits. Not much of interest across the commodities. Gold is continuing to trade sideways under the resistance at 1300. I think it will continue to do that while Wall Streets works out what it is going to do next.
Crude nicely weaker. I mentioned in my Friday notes that I could make a good argument that crude could form a nice little base pattern here if it started to come off. OK – so it has started to weaken. The thing is now not to break down again but I think I give it a pretty good chance of forming a little base pattern. Need to watch this one as I suspect it is going to have quite a bit of influence on the big picture.
XJO continues to struggle higher but still hasn’t reached my target. Just need to watch that it isn’t forming an up-slanting wedge on the hourly – a potentially bearish pattern. What really interests me, however, is our gold index. It has come off its high but at this stage we have only had one down week and after such a nice move up, would like to see a bit more profit taking. However, looking at my long-term chart of XGD (which I now have up on the wall in my office) I think the big picture is very bullish and I wonder what could make this sector break out of this huge base pattern. Not inflation. So, is it some sort of economic/debt problem, a loss of confidence in currencies, the trade war or a combination of the lot? All suggestions welcome – I am just a Simple Little Chartist trying to work out what my charts are telling me!!!
(20min delay)