Weekend Fly-by

Let’s take a quick look at the weekly charts of key stocks or indexes to see what could happen in the weeks ahead.

First, the Dow Jones:

  • New Momentum Low (blue dotted arrow) hints that lower index prices are yet to come.
  • Non-confirmation by volume (blue solid arrow) hints that the recent higher price swing was not confirmed by increased participation
  • Triangle consolidation (purple lines) reveal market consolidation, confirmed by reduced volume as the pattern formed, which hints at a large volatility move that’s upcoming
  • The index is in a downtrend, and the 20 period average has now crossed under the 50 period average (‘death cross’)
  • The technical (chart) structure hints at lower prices ahead

The US Dollar Index:

  • Confirmed and strong downtrend
  • Moving averages in most bearish orientation possible
  • Price cannot seem to breach the falling 20 period moving average

Apple Inc (AAPL):

  • Rising wedge completion, resulting in a large volatility move down
  • Momentum divergence accompanied the rising (bearish) wedge
  • New momentum low has formed, but on euphoric volume conditions
  • Volume has been receding as price has moved lower, serving as a non-confirmation of lower prices
  • Price has broken both the 20 and 50 period moving averages

The week ahead should resolve the triangle on the US Stock Market Indexes, so be aware that a large volatility price move may come at any moment next week, and don’t get taken by surprise if it happens.

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5 Comments

  1. Dear Corey:

    I understand your position on the US Dollar and agree with your chart analysis and would assume you would be bullish USO as a result. However everyone is bearish the Dollar to the extreme and I am having trouble making conclusions re the chart of USO. To me it may be topping for a substantial fall from a possible triple top. Please provide comments re blog.

  2. Hey Tom,

    Indeed, the US Oil Fund would be a proper vehicle for trading bullish biases on commodity prices, especially oil. It has broken above a potential triple top pattern at $78. There may be a standard retracement before heading higher, but the chart is currently showing a consolidation pattern which may break higher, as per the prior trend.

    The fund will likely follow the commodity, and so viewing oil prices themselves (via the @CL futures or the $WTIC index) can help provide clues for possible resolutions, as well as targets and stop-loss placement.

    Technical analysis does not exist in a vacuum, and the current environment is tilted toward inflation and against the US Stock Market. But there are always unknown variables that can crop up unexpectedly.

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