The Charts of the Day: Time to Abandon Ship?

Yesterday, it was much more difficult to make a bearish technical case for equities than it is today. I posted a daily chart of $IWM on StockTwits after yesterday’s close stating “Here’s the most bearish chart I could conjure up”:

Click to enlarge (notes on charts)

Today’s action makes the above chart look much more ominous as the diamond broke to the downside and the 81 support level was also violated on brisk volume shortly after the close:

 

Add the weakness in small caps to a double top in $EURUSD, a bloodbath in precious metals, and an assortment of failed breakouts in commodities/momentum names and suddenly there is a great deal for the bulls to be concerned with:

 

$EURUSD 2-hour put in a double top last night above 1.3480. After today’s surge in the dollar helped to sink metals and led to weakness in equities, the US Dollar Index ($DX_F $UUP) is coming up on resistance between 79-79.20 which is certainly worth keeping an eye on.

 

$CF Daily – There are numerous charts today like the one above – Yet another failure to hold above the 192 level led to some aggressive distribution selling which printed a bearish engulfing candle.

Finally, my friend Erik Swarts of MarketAnthropology posted the following excellent chart ($SLV $SPY) to StockTwits which should serve as something to chew on tonight. Eerily similar to the May 2011 top isn’t it?

 

We have seen down days which appeared to be meaningful before during this rally (two Wednesday’s ago) only to be reminded that the market can often have “no memory” from day to day. I wouldn’t get too bearish just yet, but perhaps the bulls have had just a little bit too much fun recently and it would be appropriate to pullback and test support at $SPX 1338 over the coming days.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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