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[dalcindo]

TECH-NOTE: UUP, S&P 500, GOLD


Just a short follow-up note on $UUP development and related market technical observations. On last discussion, I mentioned that UUP was nearing a rally event on the basis that the chart was calling for some unwinding.

Since that time, the unwinding has been well on its way.

However, now the question to ask is whether this is a relaxation of the related currency or a reversal towards a new trend.

FUNDAMENTAL SYNOPSIS:
Underlying fundamental principals are at play behind the greenback, namely a risk aversion trend is afoot, along with fiscal concerns looming in Europe, and the perception that China may have climbed a steep inflationary curve, thus echoing across world markets that further positive market development will be met with significant resistance for a variety of fundamental reasons. Consequently, I believe that over the next few weeks, the FOREX market will take the time to digest the post-QE2 events, the recent G-20 meeting, along with the resurfacing of economic woes from Greece, Ireland and Spain among other European peripheral economic drains.

While the S&P500 has climbed consistently with little retracement over the past several weeks, the recent high that has formed is likely to stall and reflect the "digestive effects" of the new or renewed concerns alluded above.

TECHNICAL SYNOPSIS:

S&P 500
In the WEEKLY chart below, technically, the S&P 500 has reached a complex resistance level that combines the following:
1 - 2008 collapse level of the index
2 - 2009 resistance that caused a sharp reaction
3 - Upper border of the bearish channel
4 - Re-testing of Fib's 61.8% from the 2007-2009 range

In the second S&P 500 chart, the MONTHLY events are pointing to a likely topping of the market based on the following technical facts:
1 - RSI nears a double top in synch with price @ $1,222,22.
2 - RSI's resistance line continues to cap action down into a negative divergence slope
3 - Price's double-top event corresponds to Fib's 61.8% reactive swing from the 2007-2009 range
4 - Secondary indicators are re-forming into a "pre-Decline Pattern"

Overall - S&P 500 is signaling serious internal weakness that should make recent high a serious point of consolidation or trend reversal. Taking the fundamental development into the equation, the picture favors unwinding rather than actual reversal. Look for support near the $1,010.00 level.


UUP
I believe that the recent fundamental events alluded above will continue to fuel the US Dollar.

The greenback is thus likely to regain its safe-heaven status, as seen in recent stalling of GOLD's amazing ascent (see chart below).

The UUP WEEKLY and MONTHLY charts below are both clearly indicating that a channel low was reached and supported the recent reactive rally.

HOWEVER, I am expecting that as the underlying US Dollar is leveraging against bearish world economic development (e..g: Europe, China), the bullish economic data that have surfaced in the US are likely to cap any serious rally in the UUP.

Technically speaking, the WEEKLY RSI formed a bearish spread on its EMA's at the 50-level back AUG 2010, suggesting a very strong bearish bias. Therefore, UUP's line is expected to rally against this resistance, thus hit its head against the @23.20 level over the next few weeks.

UUP's DAILY chart itself remains BEARISH when considering the big picture, again to suggest that the current rally should be characterized as reactive, rather than reversal.

Have a great week-end.

- Dalcindo



$GOLD - 20-Yr., MONTLY Chart:



S$P 500 - 10-Yr., WEEKLY Chart:



UUP WEEKLY Chart:



UUP DAILY Chart:


- Dalcindo



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Message in reply to:
reply<UUP> please see chart post by dalcindo on Options Wonderland board, and follow thread...


http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55608242


http://investorshub.advfn.com/boards/replies.aspx?msg=55615024
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- Dalcindo