Comments in this blog refer to my charts collection found at
For intra-week comments go there, updated more frequently.

Friday, May 20, 2011

Weekend wrap- commodities bear raid ending.

Well, it feels like another round-trip week, but it was actually down-up-down ride, with end result of doji weekly candles on many charts. After not very decisive decline on Monday, I put support levels on charts that worked well, and whole action of the past week was just bouncing between the support and resistance.
SPX honored its support at 1320 and appears to be drawing a falling wedge. In case it breaks down next support at 1295 should hold.
Russell 2000 also dipped to its support at 815 and bounced.
R2K truly appears to be in topping mode- even if this pattern resolves (as I expect) to the upside. It may take some time before distribution complete- tentatively in July.
US dollar is trying its best to continue to rally but I suspect  it is done for now and may start dropping from the start of the next week. The question is what will happen in July/August when more weakness may hit equities, but will deal with that when the time comes.
That gets us to the oil, gold and other commodities.
Oil did indeed held up 95 despite 4 attempts of pushing it lower.
Which brings us to what really happened to commodities over the past 3 weeks. My take is that it was as obvious bear raid as they get, brought by very obvious silver topping that gave the pretext for the pack of bears to get on the ride across the commodities. Now it appears that the second part of the run is failing, and I would expect a strong reaction to the failed raid now.
Gold seems to be leading the way.
Commodities fate is related to the Chinese stock market and I encourage you to look at few charts of SSEC  that I have in my list.

In summary, the major event appears to be failing bear raid in commodities, and hopefully some more juice in equities that I expect to show itself up next week.

No comments:

Post a Comment