Nic Lenoir's Charts To Keep In Mind Into Next Week
From Nic Lenoir of ICAP
Charts to keep in mind into next week
A brief word on stocks: Ever since the VIX posted a reversal outside the lower Bollinger band I am very cautious and bearish on stocks. We tested this morning the key upside level in S&P and so far rejected it. I have included the chart of the Nasdaq here to show that a weak trading session Monday would complete an evening star on important levels. The Shanghai composite is also sitting on a the 50- and 100- DMA ad a break would be very bearish. So I stick to my bearishness and will look for a break of 1,105 in S&P futures to confirm downside acceleration.
In Fixed Income Monday morning the 10Y US Treasury future bounced right on support at 123-00 and has moved to test the resistance of the downtrend channel. Recent weakness in 10s was a correction, the move is clearly not impulse, and a break above today's highs will trigger more upside in a hurry. This view is comforted ever since we saw my downside target in Bunds at 129-10 yesterday morning.
I will end with Gold. Disclaimer first since everybody out there I speak to is long and loves the trade: I love the fundamentals of Gold, I do think true value is around $5,000, and central bank policies around the world are doing nothing but make Gold as an asset more attractive. HOWEVER, technically the picture is horrible here. We tested a key resistance daily, divergence in terms of momentum is massive both daily and weekly. Hourly we have tested the channel resistance too. I expect we will pull-back and at least test 1,250. If this breaks key uptrend support is around 1,190 but given the magnitude of the bullish wave which appears to be ending here downside potential could well be greater. Don't hate the news and focus on finding a price at which to buy some on the pull back!
Good luck trading,