Data Diary

The return of the teuton

Posted on 17 March 2010

Technical views with Iron Cuticles

Some call me a teutonic throwback to the Brother’s Grimm – let them eat iron.  Of course, I’ve been wrong before, most recently about that midnight burrito, and probably will be again.  However, I’m not a perma bear, just seems that way given a bearish bias that has permeated my chart reading since the S&P broke out in July last year.

So when I say today that the January sell-off has left some unfinished business – I will forgive you for a suppressed giggle.  Be that as it may the weekly chart of XJO is suggesting that we are in a corrective phase and that the recent dip and charge has set up a deeper retracement in the weeks to come – I’d be happy for a test of channel support I’ve pencilled in.

Price momentum has been waning for eons – with RSI confirming the trend since peaking in October last year.  The balance of probabilities has MACD being rejected off its current attempt to cross.  Certainly the January (monthly) key reversal still stands, though the subsequent recovery from the lows was impressive.

To mine, the near term trade is a short.  But I’m willing to concede that a break of January’s high would change the picture fundamentally. I’d expect a move through 5000 to be sharp and dramatic if the market can find the stamina to push on.