Monday, June 01, 2009

Technical Picture - Retest of January Highs

We've come full circle and retested the January highs as well as the May-Sept. trendline. Now what? Well, after reviewing all of the charts below, a few themes are developing - negative divergence to higher prices; and, bearish candlestick patterns. Also notice that volatility increased today despite the big move higher. Financials failed to really participate in today's big move and volume was luke warm. The commodity led rally will end when the $USD reverses its downward trajectory. We got a first hint that the $USD may be bottoming as it carved out a hammer-like stick with long lower shadow in the support zone. Start scoping out some good reversal setups as this rally concludes in the very near-term.

Click on the charts below to enlarge and read my chart notes.


john said...

Good Morning,

As always, I appreciate your blog.

I noticed that you're not using a log scale on your longer-term SPX charts - curious as to why.


TJ said...

Thanks John,

Yeah, I use log scales in and price data only in Esignal. The scaling in esignal gives me a better view of NRIBs which is especially useful for lower timeframes. A useful tip from one of my readers.

Day Tradr said...


This may be a stupid question. Why not use the previous recent high (May 20 black shooting star) to measure the RSI divergence.

TJ said...

Day Tradr,

Trying to measure the relative strength of the rally not consolidation price swings. I'm sure that new book you just bought will explain it in more detail, but generally speaking we measure divergences at overbought levels for rallies and oversold levels for market declines.