Wednesday, November 05, 2008

Technical Picture - Overbought Profit Taking

Futures sold off overnight and we gapped down on the open following a very weak ADP report - nonfarm private employment declined by 157,000 in October, which is the largest decline since 2002. The real deal will be released on Friday. Notwithstanding the weak data, the market was very overbought and we were due for some profit taking. The decline was broad based, but on lighter volume. I'm watching the Fibonacci retracement levels. Thus far we've retraced 38%. I see some congestion at the 50% level.



As expected the VIX bounced at the 62% retracement level.

Gold paused at resistance and I'm not sure how the $USD will play out. The 20 MA keeps holding as support so we may be forming a bullish pennant. Too soon to tell, but I took my profit in AEM today just in case we pull back here.

2 comments:

bl said...

Interesting to view the direction of the 20/50 ,ema on 15m charts. could be a trigger.

Jamie said...

BL,

Triple crossover on DRYS was definitely a very good hint.