Sunday Night Charts for Monday July 11th 2011
Here is some fun with the currencies, let's face it, they rule the market. Noticeably missing from this evening's fun is AAPL, GLD, SLV, and /CL, with uncertainty any real technical analysis will be thrown out the window on a european or U.S. default anyway; selective or not. I hear enough about AAPL during the week, it's making new highs until Steve Jobs runs out of cult recruits and they all take a space comet to the next universe.
Back on topic. Watch what the EUR/USD does this week. If earnings and guidance come in strong and that wedge breaks down on the Euro, we could see one of those less than correlated weeks. Notice the cycles on the 2nd chart. The indices are green,blue,yellow,orange, and the red is the Euro. Red line is near perfect negative correlation to the USD.
That means when the Euro [first chart] goes up the /DX [second chart] basket of currencies will go down., mostly b/c of the 60% Euro weighting. (need to check that %)
What you should take away from these charts is, we have previously and will in the future have a USD rally and a market rally. It might not be perfect, but it will confuse and delude.
Also note that that IWM (green line) is somewhat more negatively correlated recently. The small caps have been on a tear with the USD falling, small cap rallies are typically considered a bullish 'risk on' play.
Fun Euro wedge pattern developing — if Euro doesn't get that 1.50 – should test that lower trendline at least. Unless the US Fed can print faster and Europe can burn Euros …..
In case anyone doubts the USD correlation to the markets. Predominantly negative correlation, except for when its not. If you are into visual patterns and believe history rhymes, we might be in for a rally over the next 2-3 weeks with the USD rallying as well. All eyes will be on Europe and the US debt, which one will produce more fear?
The indices look relatively the same, sideways to up action. I find the QQQ pattern the most interesting and obvious, with NFLX, AAPL, ect leading the way.
We are up into resistance, if you didn't buy the 200 day when everyone was in panic mode, its probably a bit too late to chase. We have earnings and an early opex this week, best to wait or play small.
AA – Alcoa – Earnings coming up. Some key levels on the chart.
Can the financials put in a base here and get us some lift? We will see. GS key $130 level, JPM, MS, BAC, WFC – all pretty similar charts. Looking range bound and weak.
Will be watching CNO around $8 level, has some good upside from here.
And now for the OMG WTF did I do to miss this charts.
First up. The Spicy Burrito – $40/lb pine nuts can't stop this. When you sell $9 burritos fast food style, the sky is the limit.
GMCR, SBUX, PEET – Coffee is hot, hot, hot !! SBUX and GMCR team up to bring the apocalypse, seriously. PEET follows along for the ride, just don't spill it in your lap.
AZO – Huge margins, check. Consumers that have to fix the car b/c they can't afford a new one, check. New highs, check.
All American oil company. WTF. That is all. DBLE
LOW – Lowe's
HD – Home Depot.
Who is building? I guess maybe consumers might need to repair stuff since they can't buy a new house without a job ? Let's see what they do at the top of the range.