Monday, June 27, 2016

Monday Morning Chartology

The Morning Call


The Market

       Monday Morning Chartology

            In the wake of the Brexit vote, the S&P suffered some severe whackage.  However, it closed right on the lower boundary of its short term trading range and above its 100 day moving average.  So technically speaking, little damage has been done.  True, it we get a follow through to this flush, then the technical picture will change.  But as of this moment, nothing has really happened except that the S&P is at the lower boundary of it short term trading range.

            The long Treasury had a very good Friday.  As you can see, it popped back above a key Fibonacci level and remained above its 100 day moving average and within very short term, short term, intermediate term and long term uptrends.  Notice that the upper boundary of its short term uptrend and another key Fibonacci level hover right above the TLT’s current price and that the last time TLT tested that level it was rejected---meaning that it needs to successfully challenge this level before we can expect more upside.

            GLD (126) is the most interesting chart.  On Friday it finished above the upper boundaries of both its short term and intermediate term trading ranges.  If it remains there through the close on Tuesday, the short term will reset to up; if it remains there through the close on Wednesday, the intermediate term will reset to up.  It is then easy sailing to the 140 level---the upper boundary of its long term downtrend.

            Even though the VIX was up 49% on Friday, I wanted to provide a little long term perspective.  If stocks are about to adjust to more realistic valuations, the VIX has plenty of upside from here.  However, as I noted above, the Averages haven’t even reset their short term trading ranges; so it is too soon to be looking for more upside in the VIX.


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