Wednesday, June 03, 2009

Technical Picture - Bearish Evening Star Reversal Pattern

The markets gapped lower on the open due to modestly weaker ADP numbers. But the real story in today's trade was a rally in the $USD, exacerbated by a build in crude inventories which put the entire commodity/energy complex on the defensive.

Everything we've been talking about in the last week is coming into play. The S&P carved out a bearish evening star reversal pattern at resistance. The tail end of the rally has been mainly about commodities sprinting higher as the $USD was throttled. The greenback is bouncing in the support zone and now we expect the markets will begin a correction in the short-term. Defensive sectors such as biotech are breaking out - sector rotation. Tech is still hot, but it will come around. The only caveat to this scenario is volume. Today's volume was dismal so we need to see some follow through, on higher volume, soon (next few days).



4 comments:

Jim said...

Great analysis Jamie.

Jamie said...

Thanks Jim,

Things are starting to get interesting.

Bryan Z said...

Hey Jamie,

Just curious if you've taken a look at the $SPX 200 day EMA vs SMA? While the SMA is showing that we tested and held, the EMA is showing we got rejected and fell.

http://chart.ly/vxyhma

Jamie said...

Hey Bryan,

Yeah, I did look at 200 EMA as well as May/Sept. trendline which have both held as resistance thus far. This area is a big test of strength and we should see who will prevail - the bulls or the bears - in the coming days.