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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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Monday, September 12, 2011

Money is always an interesting subject...

Where will the US $ end up?

Will it hold its shape...

...after repeated rinsings...

The clues may lie below.

When you smooth out the daily volatility on the Major Indices by looking at Quarlerly timeframe charts, several things become clear:

  1. So far, price is trading up off this Quarter's low after running into some support.
  2. The next support levels are around 10000 on the Dow, 1050 on the S&P 500, 1700 on the Nasdaq 100, 2100 on the Nasdaq Composite, and 550 on the Russell 2000.
  3. Money has not left the Nasdaq 100 to the same extent that it has on the other indices.
  4. With the next Fed meeting to take place before this Quarter is over, it may be that the current low will remain intact until those results are known.
  5. If that happens, and unless extreme weakness enters after the end of this Quarter, there is a strong possibility that this Quarter's candle could be retraced by around 50% during the 4th Quarter before any further movement occurs on the downside.

Below is a Quarterly chart of EUR/USD. At the moment, 1.35 is  holding as a support level. Should further weakness develop, the next support levels are 1.30 and 1.20. All eyes are on Europe over the ensuing weeks and months.

Below is a Quarterly chart of the VIX. Resistance levels are at 45.00 and 57.50, while support levels are at 35.00 and 25.00.

The last one is a Quarterly chart of the Commodity Index ETF, DBC. This sector has held up well, along with Technology. Support lies around 26.00.

I maintain my conclusions, as mentioned in my earlier post today and in last Friday's post, that the Technology sector is the "fly in the bear ointment" and that any major move down and below the August range low on the YM, ES, NQ & TF depends on the strength of the US $ and a major pullback in Commodities. In any event, volatility will remain elevated as long as the VIX holds above 25.00, and we can probably expect further large and volatile intraday swings until the VIX falls much further below that level.