Transparent Accounting - Friday, page-3

An inconclusive night again on New York but I have spent a lot of time this morning just looking at the charts and I can’t help thinking that the SPX reminds me of the mythical multi-headed snake or to try and explain further, a head and shoulders top pattern with double shoulders. Regardless of whether this proves to be the case, I think it looks as though it wants to go back and have another look at 1970 (which is the neckline) or even last week’s low around 1955. If it does that, it is going to look very much like a top. So a pretty cautious time just ahead of us. The only way to avoid this now, I think, is for it to get a move on higher IMMEDIATELY. No more time left for this stuffing around.

Gold at last is getting on with the C wave I have been looking for. Just need a little patience as we see how it behaves in the next couple of days. Silver was weaker than gold which did not impress me.

BHP looked a bit nasty after New York trading. It has left a black filled candle. Now the theory is that such a candle after a prolonged advance, indicates buyers remorse. They don’t always work – or in other words represent a top – but certainly do on BHP enough times to be very cautious. As I said at the beginning of the week, I think if you look at the very long term chart of BHP you can make the argument that the past year or so represents part of a large bullish triangle pattern. So long term bullish but short term negative.

But offsetting all these points was a couple of really nice positives – firstly, copper. Nice and strong. Has resistance up here but good to see it trending higher. And the other was the Shanghai Index. It has now broken its short term downtrend and would not need to do much to break it out of the longer term pattern that has hindered trading for so long. Hong Kong also got above resistance.

Seems we have to keep watching everything very carefully.