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Technical Pattern Watch

Last week we laid out the Technical Concerns in the EU. In our just released GMTP we point out our potential concerns with the CEE (Central & Eastern Europe) as part of discussion on the ECHO BOOM.

Country Net International Investment Position and Account Balance

This week we would like to share with you below the key Driver$/ Trigger$/ Bia$ we are presently watching as part of our MATA and Daily TRIGGERS charting services.

  • EURO is topping which means reduced EURJPYcarry trade on an overbought STOXX = Risk-Reduction on Margin = Mear Term Equity weakness.
  • US$ has found support and should rise near term = weakening US Equities.
  • US TREASURY Yields have found support and should bounce = more expensive margin = equity weakness.
  • VOLATILITY as measured by SKEW indicates hedging has been initiated for a correction by the smart money.
  • TRIGGER$ ZONE "C" looks likely.

Key Dates To Watch


Charts We Are Watching

Market Reversal Nears (if only Temporary before the Santa Claus Rally)

THE FOLLOWING CHART IS A MULTI-DECADE MONTHLY BAR CHART: Note the Historic RSI Levels

S&P500 Monthly Chart

A FIVE YEAR TREND CHANNEL MARKETS OVERHEAD RESISTANCE - Notice the Degree of Divergence.

NOTICE THE STRONG DIVERGENCE WITH RSI

5-Year Channel Chart

NEARING UPPER CHANNEL - A Smaller Degree Look at the Same Channel

S&P500 Daily Chart

AT THE UPPER BOUNDARY CONDITION BANDS ESTABLISHED DURING THE 2007-2008 FINANCIAL CRISIS: Needs to Retest 100/200 DMA for Support

2007-2008 Boundary Conditions

PAY PARTICULAR ATTENTION TO THE EU STOXX 600 FOR CLUES

Fibonacci Time Extension

WE DREW THE BIA$ IN EARLIER IN OCTOBER (First Chart). Second Chart approximates our red line anticipation.

APPROACHING TRIGGER$ ZONE "C"


US Treasuries Yields

Due for a Bounce

Near Term Bonds are due for a Correction: Aligns with TRIGGER$ZONE "C"

Since mid-October the US$ has been under siege. However, As BofAML's MacNeill Curry notes, that decline is showing signs of exhaustion from which a base and correction higher is likely. Curry's "basing" view is further supported by the US Treasury market, where yields (particularly 5yrs and 10yrs) are poised to bottom and turn higher over the coming sessions...

US Treasury yields set to base

US 10yr yields have reached "Massive" resistance. Specifically, the 2.474%/2.399% zone has been a long standing pivot which has repeatedly repelled. With momentum (14d RSI) at its most overbought since May, odds favor a medium term bearish turn in trend towards the mid-Oct highs at 2.759%.

10-Year US Treasury Yield Chart

Source: BofAML

THE US$ is Bouncing Off 17 Month Lows as the Euro Begins Weakening

US Dollar Index Chart

A strengthening US$ is not normally good for US Equities, especially after such a move on US$ weakness.

 


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