Thursday, January 28, 2010

Keeping an Eye on Three Trading Ranges

Are we in the midst of an ongoing bull market? Are we getting ready for a double dip into economic (and market) weakness?

I'm watching three instruments in trading ranges for possible clues to an answer: oil (USO; bottom chart); homebuilders (XHB; middle chart); and financial stocks (XLF; top chart).

We should see strength in these three if economic strength takes hold and if we see continued recovery among two of the hardest hit sectors: banks and real estate.

Conversely, if the global economy is threatened, we'd expect to see weakness in oil demand and possible continued pressure on those vulnerable sectors of the economy.


Soberba Insônia said...

Hi Brett... My clues are the four main eua indexes plus DAX and FUTSE. They are all testing some important previous daily pivot-heads.

So, it´s a legimitic zone for some demanding.

The problem is these past heavy bearish days plus some shaking news have intimidated the buying force, which are struggling right now at this level of the market.

I must also remember that the SP500 and NYSE couldn´t accomplish their EXP MA200 in the weekly chart, and the DJ and DAX have transposed it but werent able to hold up there.

The weekly EXP MA200 transposed for these main markets would be for me a convincing signal of the true bullish force and a new phase for the markets.

Soberba Insônia said...

Oops! eua = USA. I thougt and wrote in portuguese.

arthur19 said...

i like yr style of english, soberba

Arjuna said...

Hi Brett,
The USO chart, while more 'global' than XHB and perhaps XLF, is still tied in to the dollar. Hence I wonder if the relationship "USO should show weakness with weakness in global economy" will hold.