Some people might wonder why I said I have recently been so frustrated with the markets. Just look at the daily chart of the Dow and it is easy to understand why – it has scrunched itself right up into the corner of this diamond pattern which is completely within the major trend channel that covers all trading since the low last October
The Dow was the first chart I updated on Saturday morning – here is the second one – the S&P. It went to a new all-time high in Friday’s trading and then closed below the low of the previous day’s trading setting up a rather horrid looking key reversal day.
What is also interesting as well on this chart is the fact that my overbought/oversold indicator in blue in the middle of the chart got very overbought while at the same time, the red line at the bottom is the Fear and Greed index which is only roughly in the middle of the scale. I have never seen these two lines deviate so much before.
In blue at the top is my Geniuses. They have gone sideways now for a couple of weeks. I would have liked to see them around 100%. They normally would be when the OB/OS indicator is at such an extreme level.
And then the NASDAQ Comp. Have you ever seen a clearer one-day reversal and lower down the page we see the continued decline of the 52-new highs/new lows.
I could have included every chart I have of New York – they all look something the same. That market is in trouble. Serious trouble.
Moving on – next the US Dollar (DXY). This support/resistance band it is currently trading in, goes back for a couple of years. At the same time, it is caught in a very tight little up-slanting wedge. Terribly important to watch what this chart does this week.
Then gold. Today I am including the daily close chart which, as we all know, formed the most fantastic little triangle back at the beginning of the year and the move out of that pattern gave us the enormous rise gold has had. We are still locked in this wide pattern that gold has persisted with for some weeks. Am I going to get the move I suggested from what still looks like a large A B C consolidation? Quite nerve wracking here but keep in mind that gold always, and I mean always, looks to catch as many “stops” as it can find. I have been following gold for a long time and I know all too well how cruel it can be.
Now look at what has happened to the US ten-year bond yield this week. Back above its first resistance line but still under the uptrend. I think it would have better for hopes on rates for it to stay below that resistance band. Important week coming up here.
Following on from the US rate chart – look at what has happened to our two-year yield on this weekly chart. Almost back up to last year’s highs. This is a big worry.
And the XJO index. I can hardly believe what this index has done his week. Broke down out of that lovely diamond pattern. Skipped down to the lower support and then ran back up to the top of the diamond again before easing off once more on Friday. How the hell does the market know where all these lines come though. No matter how long I have been drawing my own charts, I often still just sit in wonderment at so much perfection. Bearing in mind what the US did on Friday I don’t think we will have a cheery start to our week.
And here is one of my worries that I have been pointing out from time to time – XMM – Miners. Just look where the blessed thing is sitting. As I keep saying – I cannot believe such perfection. Not a good spot for it to end the week with so much else happening. We need to keep a very close watch here.
For something completely different. Lumber – I have looked at the lumber price from time to time but never really studied it closely. I have taken the time to draw up a weekly chart of futures on semi log scale. (One of the advantages of semi log scaling is that you get straight lines rather than curling). However, until now I never really appreciated just how volatile this market has been over the past few years. This is quite difficult to understand as other than metals, futures usually are affected by weather etc. But with lumber we are talking about trees and they take decades to grow. So why is this market so volatile? I can appreciate that the onset of inflation caused concern and then we had Covid but why would the price triple. I am interested in this market now as it may give us a better understanding of the housing market in the US – which of course affects other things such as the usage of copper – so is probably going to be important in coming months.
(20min delay)