SPY at upper trendline of long term Rising Wedge

Most of the bearish chart configurations that appeared in the spring have flittered away harmlessly.  The breakdowns that were teased never came to fruition.  There  is one major index that remains in the long term pattern that (still) portends trouble: the S&P.  SPY has formed a clear rising wedge from the 2009 bottom.  SPY is currently testing the upper bound of that pattern.

2014-06-19-SPY_CHARTS

The SPDR Financials ETF (XLF) remains an interesting short candidate to me.  I was duped into declaring early victory a month ago and XLF has since rallied.  But it continues to contend with 50% retracement Fibonacci resistance from its 2007-2009 decline.  It is also at the very end of a multi-year rising wedge pattern.

2014-06-19-XLF_CHARTS

Another interesting short candidate to me is LLL.  It has been in a steep rising channel for over a year.  A rising channel is typically a bullish pattern, so I am not overly bearish… but flat revenue and profit growth for years, and a double in price over the last 12 months.  It seemed tempting.  The doji top a couple weeks ago looks like (at least a temporary) top.

2014-06-19-LLL_CHARTS

 

JCP Breakout

I posted a bullish note about JCP a few days ago on Stocktwits, but forget to put it elsewhere!  Drat.  Anyway, it’s a pretty nice inverse Head-and-Shoulders that would seem to portend the prospect of much greater upside in the longer term, even with today’s earnings jump.  It’s interesting that the after-hours rally hits $10.62, which is awfully close to the that upper line of resistance in the chart below.  If we hit that price today, I will sell and look to buy back.  Once that trend line is broken, I think JCP can probably run a good bit higher.

2014-05-09-JCP-MT_CHARTS

**UPDATE: So far, JCP has sold off and sold off some more.  it is re-testing the support trend line and 50 day moving average.  It has since now held and rallied from those levels.  Another stock I’ve been following, ACI, has broken the various support trend lines that I drew.  It is retesting its lows of 2014.  GDXJ has also broken down.

Warning Bells

Signs are aplenty that the market is flirting with a major breakdown.  The next couple of days should be telling.  QQQ was rejected at resistance in the form of both trendline and 50 day MA.  QQQ has now completed the right shoulder of a pretty textbook Head and Shoulders pattern.

2014-05-15-QQQ_CHARTS

 

Small caps (IWM) are threatening to break support.  Here is the IWM chart:

2014-05-15-IWM_CHARTS

Perhaps more telling is the action in Treasuries, where TLT is breaking above resistance.

2014-05-15-TLT_CHARTS

And finally, Financials may finally be breaking.  Both a rising wedge and a Head and Shoulders top are in place as bearish harbingers for XLF.  A test of 200 MA (the dashed blue line) should be a pretty big deal as there is a good bit of support around there.

2014-05-15-XLF_CHARTS

 

Emerging Markets are… emerging, again?

While the U.S. markets continue to churn sideways, flirting with the possibility of a major top, international markets are showing much greater cause for bullishness.  Of this group, India is probably still my favorite, though it has already made significant gains since I first mentioned it a couple of months ago.  The India ETF I’ve been tracking, EPI, is only now breaking above its 200 day moving average.  This, after forming a pretty textbook inverse Head and Shoulders pattern.  Given some consolidation, I imagine there’s plenty of upside left in the longer term.

The iShares Emerging Markets ETF (EEM) is also breaking above trendline and 200 day moving average resistance, and perhaps resolving a multi-year pennant pattern to the upside.

Brazil (EWZ) has been downtrending for years, and appears to have solidly broken above its trendline resistance.  It has a little ways to go before reclaiming its 200 day moving average.

Broadening the picture to include the entire ex-US world, a representative ETF, CWI, shows a multi-year ascending triangle and appears to be attempting to break out.

 

Switzerland facing multi-year resistance

The Switzerland ETF (EWL) presents us with an unusual picture: it is the only security I have noticed that has a beautiful trend line running from the 2000 market top, to the 2007 top, and now in play for a possible 2014 top.  Here is decade-plus chart of EWL.

2014-05-09-EWL_CHARTS

It is worth noting that EWL has not broken down, nor shown any particular weakness at present.  However, it has formed a textbook rising wedge over the last couple of years as it now hits the decade-plus trend line of major tops.

2014-05-09-EWL-ST_CHARTS

It adds up to an interesting situation that bears close watching, imho.

As an interesting aside, have you noticed the action in SPY?  Despite all the grief about crushed small caps and technology darlings, SPY is actually working on a fourth straight up-week!  It is coasting squarely in the middle of its ever narrowing (rising wedge) range.  Interesting.

2014-05-09-ES_CHARTS

Conversely, small caps are testing the support at what may be the neckline of a Head and Shoulders pattern.

2014-05-09-IWM_CHARTS

It’s been another interesting week.  It feels like this major cross-roads has been happening in slow motion for months now.  Only time will tell if this is the formation of a major top, or the base before one final push higher.  In my view, either way, the end of this bubble is in sight. Only time will tell what shape it takes.

 

Devon (DVN) Breakout?

Devon (DVN) reported good earning and is being rewarded.  On the chart, this isn’t just any old good day though.  It looks like DVN is attempting to break out of a pennant pattern that dates back to 2008.   I noted the technical support in a post last year, and the upside may prove to be higher than originally imagined.

2014-05-07-DVN_CHARTS

The chart I posted last year shows that the support line actually dates back to the early 90′s.

***UPDATE: Upon looking more closely at these charts, I noticed that my trendline changed bewteen 2012 and 2014!  Notice that the 2009 bottom hits support in the 2012 chart, but does not hit support in the 2014 chart.  So I went back and redrew the lines.  In this chart, the 2014 line is red-dashed.  The original 2012 line is black solid.  In this picture, DVN is not a breakout candidate yet.

2014-05-08-DVN_CHARTS

Sotheby’s “Bubble Indicator” update

In the past, I have posted about the correlation between Sotheby’s and the broader equity indexes.  Sotheby’s (BID) has proven to be a pretty decent bubble indicator, dating back to the late 80′s, as marked by this chart originally posted (in 2011) on Zero Hedge.

BID may be flashing a warning sign once again.  In 2011, it broke down from the mid-40′s and dropped over 40% before finding a bottom in the 20′s.  It has broken down again, from the same level as in 2011.  In the below chart, 2011 is the middle breakdown.

2014-05-06-BID-LT_CHARTS

Below is a closer look at the current breakdown.  In fact, my chart from 2011 looks almost identical the one below.  Last time, the price fell a good bit further.  We’ll see how it shakes out this time.

2014-05-06-BID_CHARTS

 

We can see how a breakdown in BID might correlate to other markets, like Nasdaq (QQQ).  It looks like QQQ may be putting the finishing touches on the right shoulder of a large head and shoulders pattern.  That pattern sure is conducive to a major market top.

2014-05-06-QQQ-headandshoulders_CHARTS

 

Only time will tell if it was a useful warning or a false alarm this time around.

 

 

Time to take a flier on Silver?

A couple days ago, I bought some call options on SLV (well in the money and a couple months out, as I generally prefer).  SLV was testing a level that had provided support twice in the last year.  So far support has held for a third time.  Previous to that, 18-ish had been resistance.  With today’s rally, a noticeable (but not entirely convincing) bullish wick is in place on the weekly chart.

2014-05-02-SLV_CHARTS

It feels like 18-ish could be retested next week, but this is an interesting place to take a flier.  What makes the situation even more interesting is the bigger picture cross-current configurations in the metal markets.

On one hand, I have been open in my bearish view of copper.  And Silver and copper have very similar-looking bearish multi-year descending triangle chart patterns!  So why am I bearish on copper and bullish on silver?  Good question, and part of the answer is simply: as a hedge.  But the more nuanced answer is that copper has already badly broken support.  Silver has not.  Copper is testing to confirm the breakdown.  Silver is still testing (and holding at) support.  My interest in silver is also tied to my bullish read on the inverse head-and-shoulder patterns in GDXJ and GDX.  With silver and gold so beaten down, yet holding above support, and with miners flashing a very bullish chart configuration, it seems like a decent time to gamble on a rally.

 

Bullish Idea Updates: TLT, AAPL, ACI, GDXJ, CWI

I thought I’d provide an update on how I currently read some charts that I have noted as bullish configurations in recent months.  First TLT, the 30 year Treasury ETF.  It has rallied off its base and will soon arrive at resistance.  With the broad domestic and international markets also near inflection points (see CWI below), I imagine the story will play out in correlative fashion.  So far, no clear signals, though junk bonds (JNK) continue to hold up as though there isn’t a care in the world.  Anyway, here is the TLT chart as I see it:

2014-04-30-TLT_CHARTS

It’s worth noting that one of my favorite bloggers, Chris Kimble, posted a pretty decent contrarian case for TLT’s upside.

AAPL formed a very pretty cup and handle over the last 18 months and has clearly broken to the upside.

2014-04-29-AAPL_CHARTS

The question is whether a cup and handle is a valid read after a 10 year rally?  It is more commonly seen as a basing formation.  I guess only time will tell.

2014-04-29-AAPL-LT_CHARTS

Speaking of basing, ACI has dropped over 90% in recent years.  Coal is widely despised or ignored.  Sounds like basing to me, so I am very interested.  Despite bad earnings last week and a sharp drop, ACI has held at support and remains bullishly configured in my opinion.

2014-04-30-ACI_CHARTS

Gold continues to behave weakly, albeit erratically.  Ukraine presents a wild card.  All the wild, gold miners (both GDX and GDXJ) have formed beautiful inverse Head-and-Shoulder patterns.  The GDXJ pattern looks like a textbook beauty to me.

2014-04-30-GDXJ_CHARTS

And last but not least, look at the big picture, I offer up CWI.  It one of many all-world ex-US ETF’s (and they all have roughly the same chart formation).  What I see is a clear ascending triangle; a pattern that is typically bullish.  All it needs is a breakout.

2014-04-29-CWI_CHARTS

Good luck in these turbulent markets!

Bearish idea updates: IWM, XLF, BAC, JJC, JO, EEM,

I thought I’d update a variety of bearish charts that I’d noted in recent months.  I am going to ignore the momentum plays like NFLX, FB, YELP, LNKD, etc. which have dropped 25%-plus.  They have all broken down from rising wedge (or channel) patterns, and much money has already been made the shorts who had/have them.  A decent proxy for their situation may be IWM, which is just now close to breaking the primary support from 2009 after falling from a smaller rising wedge.

2014-04-30-IWM_CHARTS

Bank of American has very clearly broken down from the rising wedge pattern I first pointed out in March.  The question is how much further it can fall.  I don’t have any idea.

2014-04-30-BAC_CHARTS

More interesting is XLF, which has not yet broken down but has a very similar pattern.  It is both at the end of a rising wedge and facing a 50% retracement of the drop from 2007 highs to 2009 lows.  For those looking to short something that hasn’t already moved down, XLF seems like an interesting prospect.

2014-04-30-XLF_CHARTS

Copper (JJC) has been many years in forming a descending triangle pattern (or maybe a massive head and shouldesr?).  It broke down a month ago, rallied back to the old support and is now close to confirming a breakdown.  It has a little uptrend in recent weeks that is currently supporting.  It will be interesting to see how this plays out, and how it relates the situation with China’s debt problems.

2014-04-30-JJC_CHARTS

Coffee was a huge mover earlier this year, rallying 100%.  It is now banging its head against the same resistance and showing wild volatility.  It will be interesting to see whether coffee busts through or falls off.  I imagine only the weather knows.

2014-04-30-JO_CHARTS

Lastly, emerging markets (EEM) are facing resistance.

2014-04-30-EEM_CHARTS

A very similar pattern in reflected in the Brazil ETF (EWZ).

2014-04-30-EWZ_CHARTS

 

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