Lead, Follow, or Get Out of the Way!

//Lead, Follow, or Get Out of the Way!

Hawk’s Scan Sentry Report January 21, 2013

This past week as I watched the S&P, and the Dow indexes make new 52 week highs,  following the Russel’s breakout to new highs earlier in the year, I caught myself wondering what was going on with the NASDAQ?  Why is it being such a laggard?  I am a short term trader, but I decided to take a longer term perspective. Taking a look at the weekly charts I can see a completely different story. The futures markets I trade are not as correlated as they appear to be on a day to day basis. In historical terms it is really the S&P which is lagging behind the NASDAQ. When we look at the recovery of the American indexes relative to their highs of 2007, just before the financial meltdown, we can see that the NASDAQ index tested that high in May of 2011 and then flew past it in February of 2012. In fact, $COMPX has already bounced off of those levels twice as support since that time. The Russel also tested its 2007 highs in May of 2011, but did not see a confirmed breakout of that level until the beginning of this year. The Dow index $INDU has still not tested those levels, although the Dow futures contract did make a test last September and is currently making unconfirmed higher highs now. A little behind, the S&P index and futures contract are still 5% away from those 2007 highs even though they are making new 52 week highs now. From this perspective I still see the NASDAQ as the leader of the US equities. So, I will watch to see if it continues to lead these markets up; or if it begins the next leg to the downside.

Index Futures:

NASDAQ Index

(Well above the 2007 highs, but weak trend strength in Radar3 and weak buying in Radar1.) 

Russel Index

(Bullish trend strength in Radar 3 and increasing buying in Radar1 as it breaks to new highs.) 

S&P  Index

(This market shows bullish indications in the Triple Trender and Radars 1 and 3.  Still has a way to go to test the 2007 highs.  ) 

Dow Index

(Weak trend strength in Radar3 and weak buying in Radar1. Just now testing September 2012 highs, still behind the 2007 highs.) 

I want to share with you how I am looking at several of my favorite markets this week. On the examples below I explain my analysis for some of the most commonly traded symbols using some of the most highly regarded technical indicators available. These tools are used by both institutional and private traders across the globe and are built into many of today’s most popular trading platforms. However, if you are not familiar with these indicators please follow this link to a legend describing these tools.

Other Charts and Analysis

Equities Setups:

(Buy) GE- General Electric

(A significant breakout of the down trendline @$21.13  and a resistance line @ $21.93 following a bullish Pullback Divergence. Triple Trender is bullish. Radar1 Fear/Greed shows enthusiastic buying. Note that Radar3 Trend Strength has remained blue throughout this consolidation. These downward pointing blue histogram  lines represent  bullish strength in the midst of a downtrend. )

Commodities:

GOLD

(I am bearish on this market for this week. Note the bearish Pullback Divergence in the Radar2 Price Leader, and the bearish Overbought Trend Exhaustion 1 signal. If this closes significantly above the down trendline I will change my perspective, otherwise I’m viewing this little rally in gold as a pullback in a downtrend.  )

CRUDE OIL

(A nice example of a Bull Flag breakout as anticipated in last week’s posting. All of the Radars and Trenders are bullish too.  Note the this would still have to get through resistance at $97.94 before achieving the target projected at $100.16 .)

Forex:

USDCHF

(I see this as a bullish opportunity. Note the Triple Trender has synchronized bullish and the Radar3 Trend Strength is strongly bullish. Also note how the Radar1 Fear/Greed is showing stronger buying than the previous indicator peak. Couple this with a down trendline breakout and a recent bullish Pullback 23. Since this would be an early trend reversal I would anticipate a pullback into the short term Trender before continuing to the upside. )

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .

2018-01-08T07:06:34+00:00 January 21st, 2013|Hawk's Picks|