Stocks: May 14

Monday 26th May:

This article is copied from my weekend blog post.

Friday’s action on the S&P500 had me thinking that this was a bit like a ‘Neil Armstrong moon landing’ moment. It was ‘one small step for the S&P500’ higher on Friday but ‘one giant leap for market psyche’ with the significant close above the psychological 1,900 level:

S&Pdaily

This close above the 1,900 level, although only small, also represents a close up through the daily chart’s ‘ascending triangle’ pattern. These patterns are generally bullish continuation patterns and so I’ll be watching for any signs of this in coming sessions.

I will also be watching to see how this impacts other stock markets and the FX markets. I have been noting over recent weeks that I attributed the lack of FX trade signals to this recent choppiness and indecision on the major S&P500 index. I will be looking to see if this S&P500 close above the 1,900 level gives any clarity to stock market direction and, then, whether this enables momentum to return to the FX markets.

Price action may become quite interesting on the S&P500 now. Whereas one might expect some further mild choppiness around this level as the index sorts out whether it really wants to continue on this tangent, there must come a point where the many traders who are ‘short’ here start to lose a bit of faith and scramble to either just close out positions or swap sides. The impact of this latter possible scenario could make for some interesting price action.

The S&P500 is not alone with this bullish shift and some other major US and global stock indices and stocks have made bullish breakouts as well:

Dow Jones Industrial Average DJIA: this is lagging a bit as it continues chopping along within an ascending triangle pattern.

INDU

NASDAQ: was consolidating within either a ‘Bull Flag’ or a bearish ‘H&S’ pattern. The 4,000 level was key here as this would be the ‘neck line’ of any bearish H&S pattern. Price has now made a bullish breakout and this suggests continuation.

NASDAQ

Russell 2000: As with the NASDAQ, this ‘small caps’ index has been consolidating within either a ‘Bull Flag’ or a ‘H&S’ pattern. The 1,100 level was key here as this would be the ‘neck line’ of any bearish H&S pattern. This index has also made a bullish breakout and this is significant as I see this index as the stocks equivalent of ‘the canary in the coal mine’.

RUTdaily

IWM: the ETF for the Russell 2000 has also made a ‘Bull Flag’ style of breakout:

IWM

PCLN: I wrote during last week about how I wondered whether Priceline was trying to tell us something. The bullish breakout here from the ‘Bull Flag’ pattern seems to have been an accurate forecast of things to follow for the week:

PCLN

TSLA: this, too, looks to be making for a ‘Bull Flag’ breakout:

TSLA

FB: this is another stock that seems to have made a bullish breakout rather than a bearish H&S move:

FB

FDX: this as well:

FDXweekly

DIS: this has made a ‘Bull Flag’ break too:

DIS

ADBE: Adobe has also made a bullish breakout:

ADBE

IYT: the transport ETF continues on its bullish pathway for now:

IYTweekly

UPS: so too for parcel transport and UPS:

UPSweekly

USO: the US oil ETF has made a bullish triangle breakout as well:

USO daily:

USOdaily

USO weekly: this chart gives some perspective to this breakout: 

USOweekly

MCD: is looking bullish and any close above the $104 level would suggest continuation:

MCDweekly

PEP: any close and hold above the $87 would suggest continuation here too:

PEPweekly

WMT: any close and hold above the $80 would suggest continuation here too:

WMTweekly

AA: $18 seems like a destination here:

AAweekly

BAC: still below the key $15 level but this does have a bit of a ‘Bull Flag’ look to it:

BAC

BK: has a bullish ascending triangle pattern forming up here:

BK

HPQ: I am still tracking a bullish ‘inverse H&S’ breakout here:

HPQweekly

MGM: has a ‘Bull Flag’ look to it:

MGM

YHOO: this also has a ‘Bull Flag’ appearance:

YHOO

Further afield:

EEM: the emerging market ETF is staring to look a bit bullish too as it drifts higher and a close and hold above the $45 would be quite significant:

EEMweekly

India’s SENSEX has made a bullish ascending triangle breakout already:

SENSEXweekly

UK: the FTSE 100 index continues tracking higher within its bullish ascending triangle:

FTSEweekly

Hong Kong: The Hang Seng index, too, is in an triangle of sorts:

HIS

Japan’s Nikkei: This looks like it is trying to regain some bullish momentum after the earlier trend line break:

NikkeiMonthly+Fib

Singapore’s STI is triangle bound but looking bullish:

STIweekly

Toronto’s TSX: has made a triangle breakout already but looks set to aim for the previous high of 15,200 region:

TSXweekly

Australia’s XJO has made another bullish weekly close above the 5,480 level. I expect price to head for the 78.6% fib and 6,000 region now:

XJOweekly

Australia’s XSO small cap index is worth watching now too as it moves closer to the apex of a triangle pattern:

XSOweekly