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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...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
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Thursday, November 03, 2011

Head & Shoulders vs. Double Top

The case in favour of the Major Indices forming a H&S pattern on their Daily charts appears to be fading, with the Dow 30 and the Russell 2000 putting in a much higher right shoulder on today's action...there is still a chance for such a formation to play out on the S&P 500 and the Nasdaq 100...please refer to the Daily charts below. The Dow 30 is just shy of the next resistance levels at 12100 & 12200, while the other three closed at resistance levels.

The Financials ETF, XLF, closed today in between resistance and support and has put in a slightly higher right shoulder on a potential H&S formation, as shown on the Daily chart below.

Everybody's favourite, EUR/USD, is also in the process of forming a H&S pattern...price closed just below the falling 50 sma, price resistance, and the slightly lower right shoulder, as shown on the Daily chart below.

Since each of the above instruments has rallied since the beginning of October, I've brought in the following percentage comparison Daily chart to compare their relative strength. The potential H&S pattern can be seen beginning from October 21st. It also shows that the EUR/USD has been weakening and lagging in the rally since October 10th. I'll be watching for signs of a decline beginning in the EUR/USD and whether the others weaken and follow suit over the next few days/weeks. Whether these markets decline from a H&S pattern, or possibly from a double top remains to be seen.

In addition and for comparison purposes, I'll be watching the VIX, DB, Gold, DBC, $CRX, AUD/USD, the Australian Stock Index ($AORD), the Portuguese Stock Index ($PSI), the US $ (/DX), and NKD as referenced in my prior posts from October 25th onwards.