Its time for the usual Swiss team’s technical report and comments.
Before we do so lets be clear that there are an increasing amount of technical problems here even as these indexes make new all time highs.
Here the 4 major US indexes (charting nas100 rather than nasdaq itself).
The situation on the nasdaq100 is very complex as previously covered as the three largest components make up such a significant weight of this index. Nonetheless this makes the analysis of the likely movements in this index a little easier due to her concentration. Technically speaking the breadth issues remain in spite of Apple’s recent breakout which has propelled the index onwards. Today I see, thus far, yesterday’s breakout has almost entirely reversed for apple. In terms of price patterns to see a clean reversal bar on the close would be very meaningful for the nasdaq100 as apple has been the major support for the entire index. (The SOX strength and overbought issues should be well known and clear to all readers here).
The real story of this market is 500m to 4bn sized cos vs the mega cos with market caps over 100bn. The divergence in performance is immense. The smaller caps technically broke down some time ago and this breakdown creeps every higher up the “food chain” in terms of capitalization size.
Here the SP600 small cap index price chart with various indicators.
She is showing price weakness with the breakout failing to get traction whilst at divergence on momentum and a narrowing of the 50 and 200dma. The index appears close to rolling over her bull trend, from pure price work. In terms of breadth below.
Of course the sp600 index contains some very large companies but the smaller the corporates become the more concentrated the winner’s circle of stocks becomes. Technically the sp600 is the weakest index and this is very likely due to the polarized nature of performance we see from corporates.
The wider nyse shows the same narrowing of the ‘winners circle” that is a feature of all tired and extended bull markets.
In terms of fx its the dual story of the GBP and US$ and price wise there is nothing to suggest this story wont sustain. Commodities have a bid and even as equity indexes fall today producer cos are rising generally not falling, oil is flat and well supported albeit below the 104 prior breakout level. The copper breakout is also holding and the miners have a strong big and momentum. Even if we see near term weakness the recent momentum should at the least produce an attempt at a higher high for commodity themes. The AUD remains in play and should move higher from this level.
We also have an important formation, price wise on the UST.(US ten year treasury).
Without more delay here the Swiss team.
Here AG
And here GS
I’ll provide the Fitzpatrick report again from next week as usual but suffice to say his jpy short position is in grave grave danger here and now. With an allocation of 40% and a trade that has been running for some time. Its going to sting if he gets rolled over.
And here an excellent tech run through from CS.
And lastly not a technical comment but team please don’t underestimate what could occur price wise to the bullion markets. Bullion is still inside a spectacular secular bull market. Volatility is not high so the door is still open to asymmetric trades in the asset class. Check allocation levels whether a leverage trader or cash investor. Its a good time to dust off your bullion charts, is my comment.
The mean reversion and over extension of the bullion is likely to be spectacular when it occurs for very sound and well known macro and technical reasons.
All the best guys
Rich