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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
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Saturday, December 24, 2011

3 Dows...DBC vs AUD/USD...DBA vs POT vs SPX

Below are 3 Daily chartgrids of the following (first I'll show a series of charts, then provide some general comments and a summation at the end of this post):
  1. 3 Dows
  2. DBC (Commodities ETF) and AUD/USD
  3. DBA (Agricultural Commodities ETF), POT and SPX

Below are a series of percentage comparison charts of these instruments on varying timeframes:







General Observations:
  • All instruments are at or near their overbought level on the Stochastics indicator
  • Momentum is in positive territory above Zero on all instruments
  • The only one to have made a new high since August this year is the Dow Utilities, and it is in a definite uptrend on the Daily timeframe
  • Of the 3 Dows, Utilities has been leading in strength this year, followed by the Dow 30, then Transports
  • They have all rallied this past week
  • The Dow 30, Dow Transports, and SPX are attempting to re-form an uptrend on the Daily timeframe
  • DBC, AUD/USD, DBA, and POT are all still in definite downtrend
  • During the past 30 days, DBC fell below the AUD/USD, but regained in terms of strength the past 4 days
  • During the past 5 Years, POT has shown relative strength as compared to DBA and SPX...SPX began to diverge and fall in 2008, while POT shot up to new highs...POT was the first to show signs of recovery before SPX near the end of 2008...during the Year-to-date, we're seeing a divergence this past quarter with SPX advancing while POT and DBA continue to drop, apart from an upswing this past week
  • Over the past 10 Days, POT and DBA stabilized...DBA moved above SPX...and POT jumped ahead of both DBA and SPX during the past 2 days

Summary:

Generally, these markets are beginning to look a bit overbought. However, with momentum in positive territory, they may only pull back sufficiently to relieve this situation in the short term...a "tell" as to whether they may then continue to rally would be to see if momentum stays above zero. I'd look for continued strength in DBC and AUD/USD...any developing weakness of significance could have an negative effect on the equity markets. I'd also look for continued strength in DBA and POT...a drastic drop in POT could, ultimately, have a major impact on the equity markets.