LIGHT CRUDE OIL

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In my previous post on Light Crude Oil, I wrote about a possible flag formation forming on the price chart. It looks like I was a bit optimistic with my bullish forecast.

http://techcharts.wordpress.com/2012/03/26/light-crude-oil-4/

Price continued lower, broke down the 103.75 support level and reached the lower boundary of the trend channel at 100.8 level. This is the 3rd test of the strong support level at 100.80. In the first trading session after the holiday light crude is testing the strong support and trying to rebound. It is important to note that $98-$100 area is strong support where 100 & 200 day moving averages meet. Light crude oil continues to make higher highs and higher lows. Uptrend should remain intact as long as price holds above the 200 day moving average. In the next few days, we would like to see the price rebounding from the lower boundary of the trend channel to call for more strength.

SPAIN IBEX 35 INDEX & EUROPE

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While most of the european markets are recovering or have been performing much better since the beginning of 2012, some had extremely poor performance. In this post I’m analyzing Spain’s IBEX 35 index and comparing it with other European country indices to see the ones that are recovering, performing better and worse. This should give us an intermediate-term overview of European equities performance. I believe if we need to rank the countries from poor performance to better performance (Spain, Portugal, Italy & Greece) should be in the poor performance category, (Switzerland, Sweden, Netherlands, Ireland, France, Finland, Belgium and Austria) should be in the recovering category and (Norway, Denmark, UK and Germany) should be in the better performance category.

If we analyze Spain’s IBEX 35 index, it has been pressured by the long-term moving average (200 day) and is now testing the lower side of its 8 months-long consolidation range. RSI failed to move above 50 levels in the past three attempts and price also failed to breach the long-term average. Now the question is will the index also break down the intermediate-term consolidation range? This will be answered by the market in the next few weeks. Unless we see a sharp reversal from the support at 7,800 level IBEX 35 can fall back to 2009 low levels at 6,700. Index should clear 8,800-9,200 area to be ranked in the recovering category.

WHEAT

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On the 18th of March I analyzed Wheat continuous price and drew attention to a possible symmetrical triangle.

http://techcharts.wordpress.com/2012/03/18/wheat/

In the past one week price resumed its consolidation in this tight trading range. Volatility is still at an extreme low reading and price is now closer for a major breakout from a 2 month-long consolidation range. Keep wheat on your watch list for a possible breakout in the next few days. Boundaries of the consolidation range are 670 and 635. A breach above 670 will be extremely bullish for Wheat and target 700-750 area in a short period of time. Failure to reverse from 635 will put pressure on the downside.

COPPER

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Since my last update on Copper on the 19th of March price resumed its consolidation in a tight range.

http://techcharts.wordpress.com/2012/03/19/copper-3/

This has increased the likelihood of a strong breakout from the possible symmetrical triangle. Given that Dr. Copper held above its long-term moving average (200 day moving average) and rebounded after each test, I would expect this breakout to occur on the upside. Current technical outlook suggests higher prices but again I would like to see the market confirming the direction of the breakout. For now we can conclude that we are very close to a major breakout. Boundaries of the symmetrical triangle should be watched closely. Breach above 395 will confirm an upward breakout and price will target 415-420 area in the short-term. Breach below 375 will be negative for Copper in the short-term.

LIGHT CRUDE OIL

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Followers of Tech Charts who are interested in energy prices would remember my earlier posts on Light Crude Oil in February. I always like to use same templates on price charts while analyzing historical data. Looking at the same indicators puts you in sync with price movements. Band width indicator is a perfect example of repetitive cycles. Analyzing price data with this volatility indicator helped me to forecast strong trend periods on crude oil.

http://techcharts.wordpress.com/2012/02/10/light-crude-oil-3/

Technical conditions are suggesting another strong trend period for oil prices. Given that the price consolidated above 103.75 levels and formed a bullish flag, possibility of an upward spike is higher. In the short-term volatility  will increase. As we always do, we are going to wait for a confirmation of the breakout in one direction. An upward break above 109 levels will push prices towards $115 levels. Strong support is currently standing at $103.75 levels.

COPPER

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Copper is now closer to a major breakout. Since my last analysis on Dr. Copper on the 26th of February, price remained in a tight consolidation range without any directional movement.

http://techcharts.wordpress.com/2012/02/26/copper-2/

As price have spent more time in this congestion area with low volatility readings, a breakout in the following days should occur. The fact that copper price held above its 200 day moving average, chances of an upward breakout is higher. Though we would like to see decisive breakout in either direction for confirmation. Two important levels to watch as a support; 370 level and as a resistance 400 level.

DOW JONES INDUSTRIAL AVERAGE

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In the past few weeks we have been reading divided opinions on equity market performance. There is definitely no consensus on the bull market or the bear market. I read several articles suggesting it’s time for a stock market correction supported by reasonable arguments and several suggesting it’s time to buy equities. When public opinion is divided as it is in today’s market conditions, it means the markets are actually in a “corrective period”. Because it is the bull or bear market that has a direction and as a result a consensus. A trendless market doesn’t create a firm public opinion. You might ask what kind of “corrective period” is this that took us from 7,000 levels to 13,000 levels? Well the chart above puts these arguments into perspective and helps you understand and calculate the odds of both arguments happening in the following months.

Dow Jones Industrial Average is in a long-term correction. It is a similar correction to the one the index experienced between 1965 and 1982. At that time Dow Jones Industrial Average consolidated between 1,067 and 570 levels for 17 years! Dow Jones Industrial has been consolidating in a wide range since the beginning of 1999. And in this consolidation period it is now approaching to the upper side of its range. When compared with 2009 levels when the index was around 7,000 levels, market is now overextended and close to 14,000 levels.

So the arguments suggesting higher prices are betting that Dow Jones Industrial Average has completed its long-term correction and is likely to break above historical high levels and move to new all time highs.

Arguments suggesting a possible stock market correction are betting that the long-term consolidation is not over yet and the index is closer to its upper boundary which should eventually push prices lower.

If you were to make a decision by looking at this long-term chart  which argument would you give more weight?

EURO BUND & US 10 YEAR T-NOTE

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In January I’ve analyzed government bonds and drew attention to the weakness and to several negative divergences on the momentum indicators. These signaled weaker bond prices and possible “RISK ON” rally for equities.

http://techcharts.wordpress.com/2012/01/21/euro-bund-us-10-year-t-note/

This week bonds gave up and experienced a sharp “sell-off”. Of course the sell-off in bonds, buoyed by higher CPI data from U.S. due to higher energy prices renewed inflationary expectations. Could this be the beginning of an inflationary environment?

Given that the technicals have played out well in the past few months with prices pulling back to their long-term moving averages after seeing several negative divergences, I believe we should again wait for the prices to tell us what the market is thinking. It is still early to call for an inflationary environment given that Euro Bund and US 10 Year Note prices are holding above their 200 day moving averages. This is still a bull market for bonds and we are experiencing a pullback to important support areas. For Euro Bund continuous futures prices 132-135 is an important support area (horizontal trend support & 200 day moving average). For US 10 Year T-Note continuous futures prices 127-129 area is an important support area (horizontal trend support & 200 day moving average) where we can expect some sort of stabilization.

SWITZERLAND SMI

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Switzerland SMI index has been volatile due to euro zone debt problems. Until mid-2011 price action between 2010 and 2011 was more like a sideways consolidation. However, index broke down the strong support at 5,960 levels in July 2011. This triggered a sharp sell-off towards 4,600 levels. Recovery took 6 months and by the end of 2011 SMI was back above the previously broken support level and the 200 day moving average. I think this was the most important technical action that put the index back to positive territory. Being able to push back above the long-term moving average and the resistance at 5,960 level helped the index to find firm ground.

In the past few months we have seen SMI consolidating above the trend support and the long-term moving average. Index is likely to challenge the resistance at 6,500 levels in the following weeks. Unless we see 5,960 level break down again, we should expect a positive trend.

POLAND WIG 20 INDEX

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Thanks to wordpress.com’s improved statistics page, I can now see the visitor’s country profiles. This helps me to diversify my analysis in order to create a larger community at Tech Charts. Tech Charts blog is having visitors from more than 20 different countries everyday. In today’s post I’m analyzing Poland’s WIG 20 index with my usual template (Weekly chart + RSI + 200 day moving average). I like to look at the big picture and weekly charts help me to see the major trends.

Poland’s WIG 20 Index respected the 200 day moving average both during the downtrend and the uptrend. Between 2009 and 2011, index trended higher after finding support each time at the 200 day moving average. RSI confirmed the uptrend by finding support at 50 level. In mid-2011 WIG 20 index broke down its long-term moving average at 2,700 level and fell sharply to test 2,000 levels. Since the last quarter of 2011 WIG 20 has been forming a sideways consolidation range with the boundaries standing at 2,400 and 2,180. Upper boundary of the consolidation range and the long-term moving average are both forming resistance at 2,400 level. In the intermediate term index is in a sideways consolidation. A breakout will follow soon.

A break above 2,400 level will reverse the last 8 month’s downtrend and will be positive for the index. A break below 2,180 level will resume the downtrend and the consolidation pattern will be confirmed as a symmetrical triangle continuation pattern.