As $COMPQ ventures into new yearly highs, it is now officially drilling into the resistance zone that should prove pivotal and tedious. In fact, I believe that this zone will represent a rite of passage for this junior index, before bulls gain confirmation that the US economy is back and running once again.
This period of anticipation is likely going to be characterized by two conditional scenarios. in the first scenario, the fundamentals develop positively in the short AND mid-term views, and the resistance zone cedes to a sustained consolidation. In the second scenario, the fundamentals are yielding to uneasy or short-sighted investors and falls short of the drilling power to resume a decline.
Either way, a decline is far more likely gain forceful momentum than any sustained growth, considering that only a handful of economies are expected to get "out of this mess". If China continues to relax its policy and manage its inflationary risk favorably (i.e.: without limiting its own domestic capital investment, consumption and growth), then the eyes will turn to the US for any indication of further growth. If the USD economy declines, I believe that China will sell off more of the US Dollar and accelerate a mechanism by which its currency will trade on different intermediaries than the USD. And this may spell the beginning of a new era for the Asian and world markets, IMHO.
The $COMP Chart: Looking specifically at the graph below, the are several overlapping indicators, which taken as a whole, indicate some serious resistance ahead.
RSI, MACD, TRIN: These three indicators are suggesting a likely reversal at the current level. RSI hit a new high as price head-butted into the resistance zone. Correspondingly, MACD pierced through its overhead resistance line, suggesting a bullish consensus support as we enter this new level of trading. If MACD steps and holds on to the resistance-turned-support level, then we may very well be into that first scenarioo alluded above, where consolidation will characterize that trading period, IMHO. If that support breaks, it may indicate a general failure from the market to deal at this expensive level relative to the risk in total fundamentals.
Additionally, TRIN breached into a new low, here too explicitly stating that confidence is relatively high at this new level. but this may be temporary, and a sustained residence UNDER the prior support may provide the visual support to express true market confidence, IMHO. Until then, the trading level remains tentative, speculative and risky, for reversals remain higher probabilities than continuation of any bullish trend.
NAAD, NAHL: Nasdaq new high/lows and advance/declines lines in the chart are indicating the same resistance expectation. While the NAHL is smoothed and not as clear about resistance levels, the NAAD line (pink) is clearly indicating a resistance level right at the current trading level.
OVERALL - Again, all indicators have culminated to a point of congestion, whose denouement is expecting to come when the fat lady Fed steps onto the stage and sings her highly anticipated rate song. Speculative minds on the street are setting this event to occur sometimes this summer. Until then, the opening scene belongs to even battle between bulls and bears.
PBEGF was not an active chart in the charting engine I regularly use (stockcharts.com). I have requested it to be listed there. I received a confirmation that it may be listed on stockcharts.com anytime: "Your symbol request for [PBEGF] has been submitted to the StockCharts.com Support team. We will email you once it has been added to StockCharts.com."
Regarding your specific request about the US Dollar, I continue to believe that the EUR:USD chart is trading within the confines of a bearish channel, and that the recent high corresponds to an even longer term downtrend line which originated from this past winter HIGH. The XEU vs. USD chart below approximate that graphic representation, in lieu of the actual EUR:USD chart on my oanda forex account 9which I remain inept at transposing into this text format).
Looking at the single currency itself, the USD chart below does indicate a sustained bullish channel, with recent LOW corresponding to a validation of that channel (see: $USD - 12-Month, DAILY Chart below).
Seeking fine-tuning among bulls and bears, a relative strength chart of UUP against UDN happens to indicate a similar technical development, whereby the recent LOW defines a bullish bias within that rising channel.
In fact, considering the UUP chart alone, the recent LOW merely validated the daily 200-EMA as a strong technical support without losing completely the bullish spread between the 9 and 21-daily EMA trendlines. This speaks favorably for this PowerShares Bull Fund. Additionally, the OBV line made a higher low, against the A/D and ChiOsc lines, each testing their respective historical bottom.
OVERALL: I believe that the recent LOW did dilute most of the market sellers and carved out more room overhead for an upside move going forwards, IMHO.
XEU vs. USD - DAILY Chart:
$USD - 12-Month, DAILY Chart:
UUP vs. UDN - DAILY Chart:
- Dalcindo
---------------------------------------------------------------- Message in reply to: Thanks Dalcindo for the information you provided this week.....Could I get a chart and your thoughts about PBEGF?.....I have owned this stock for about 5 years and its been a winner....Lately, I have started to think about selling some for diversification.....Timing will obviously be important so, I would appreciate any of your tips........Are you as concerned about inflation as I am? , and a falling dollar?...I have been thinking about UDN and your chart & input is appreciated....Hope all is well. ----------------------------------------------------------------
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