A rectangle has been forming on the S&P500 since early September. When watching short termed consolidation patterns such as this one, pay attention to a short termed momentum oscillator like Stochastics. Its in its element here- where it can pinpoint short termed buy and sell points. Note the circled points on the stochastics indicator on the chart, and my corresponding buy/sell arrows above that. Each stochastics hook and crossover represents a change in direction, and return to the top or bottom of the rectangle.
Right now, this index is in danger of breaking its 50 day MA. However, strong support lies just underneath this moving average at 1420 (green horizontal support line, as noted in this blog last week). I suspect we’ll test near 1420 and bounce up – but a bad earnings report from influential stock Apple (AAPL) this Thursday or any combination of earnings announcement from the 100 + components that are part of this index set to report this week might change that picture.
Keith on BNN to talk about precious metals
I was on BNN last Thursday and covered my take on gold and the TSX. We looked at a couple of indicators that gave us a heads up on gold’s pullback (which I did advise readers of this blog on a month ago). We also covered my argument for a new buying opportunity on coming for gold as it approaches 1700 or around that level.