Another wide-ranging day on Wall Street, with indices closing near their lows for the session. As mentioned on Friday, after five up-days, I always start looking for corrections and it would appear that this is now beginning. Just needs time now and with a holiday tonight in New York, we are going to have to be extra patient!
My preferred option for the S&P is still, after a correction, to go back up and at least look at the gaps that were left at the top – mermaid’s call. But in the meantime, I do think we need to do more work in the lower half of the range that the indices have traded in over the past couple of weeks.
At the time of the initial fall I mentioned that I was quite impressed about where the S&P stopped – right on the main uptrend I have for the last major wave up in the market from the 2016 low – semi log scale. I would like to see the S&P come back again to build a stronger base in that lower area.
However, as impressed as I am with the S&P, when I move on to the charts of some other markets, there is still a lot for us to worry about – particularly the FTSE and the DAX. So just keep in mind that if I am wrong about the S&P finding its low then we have only seen half the fall.
The Indian market (Sensex) is interesting. It has probably been one of the best performing markets over the past couple of years and yet while markets have bounced over the last few trading sessions, the Sensex has barely moved. Always worth watching the best performers as they can often give an early signal. Like to see it move ahead in the next couple of days or it might actually be suggesting that we have indeed only seen the first part of a major correction.
US dollar finally found some support in the latest trading session which has had a negative effect on commodities and in particular gold. As I mentioned on Friday, the gold price is now up into the MAJOR resistance area built up over five years. A little bit interesting that the Commercials didn’t add to their short positions last week. We must give it time here because if it breaks topside, the move is going to be very exciting – which is probably the understatement of the year. Patience required in all markets at the moment.
Our market has rallied along with New York retracing half the fall. Shall be watching how we perform this week. BHP looks a bit toppy here and as it has been one of the leaders of recent months, will have to give it time to round up the troops for its next move.
Money is slow to return to the trading area with much quieter conditions. Perhaps the “snatch and grab” we have had over the past two weeks might now be turning into much slower conditions until the markets sort themselves out. Care with runners as some of then have been leaving little support once they turn down.
(20min delay)