Monday, January 14, 2013

Working Off Overbought Conditions

The market is showing a lot of sideways action lately, working off the overbought conditions from the surge higher two weeks ago. We're not seeing much of a pullback, except for tech maybe. But that is mainly thanks to AAPL which lost over 3.5% today.

The more indices are trading sideways, the more bullish this is for the near future. But when everyone sees the same thing happening, often the opposite comes true. Major indices are almost up 10% since the November 2012 lows (small caps even lots more), caution is still necessary. This is not the moment to go all in long if you weren't long already. No. Instead, it wouldn't hurt to start hedging long positions or start trimming profits.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Euro, oil, metals
The euro is looking at 1.34. Only 100 pips beyond that lies the 2012 top, 1.35. So for those buying the recent break higher, be careful because first major resistance is nearby.

Copper wasn't acting that well today, gold was up only little, but silver was doing great, +2%.

In the meantime, oil finally seems ready to take out the 94-level.

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