Spy of the week
This week the market experienced a range-bound price activity. Being in a downtrend channel, we started this week with a bearish bias, but as we went progressed into time, the SPY formed a significant higher low:
For now, it looks like a 50-50 chance of the market going either way. Looking to strengthen the argument, the 5 day MTF-MA (The stair-step moving average) looks indecisive by frequently alternating from red (Down) to green (Up), and staying relatively flat.
This kind of activity eventually tends to yield a decisive move, we just don’t know yet what will be the direction with a high percentage of confidence. We will certainly pay a closer look the next session or two until things get more clear.
On a side note, we have seen a similar pattern last week on the USO (Oil and Gas ETF).
This time, the prices consolidated all along the upper price channel, on a much tighter price range waiting for the price to break upward. Well, yesterday it happened. As we hinted, a fast, upward move was due:
If the slope will fail to hold the price above the channel, we will see a sharp move back to back the channel, proceeding with the downward move.
Now back to the SPY on the daily time frame, this chart does not look better. Still, big candles of both colors, with no clear direction. But this scenario reminds us of areas that behaved just like that in the past, and it seems like someone is trying to “shake” the small investors, just so that they can get into the market through cheaper prices:
Dollar keeps losing ground
The dollar index ($DXY), which centralizes and concludes the overall movement of the dollar VS other currencies, had been falling for the second consecutive week.
The last few sessions we saw the Darvas Box giving us Short trades only, as all the Moving Averages were pointing lower:
As another multi-year support level is being tested (0.9600) we have to agree that this pair will probably take a lot of time to “heal” that damage to price, before it can join join his friends to the uptrend:
Silver and Gold, Friends no more?
Silver and Gold are good old friends, as they are both considered precious metals, they have a strongly correlated price action. Lately though, silver prices have been drifting lower, leaving behind gold prices:
Now that we are witnessing the first sign of decoupling, that little piece of price action could be a great sign to the economy. Investors are no longer buying gold and silver because of the fear of a weak economy, but because they really need it to hedge their positions, to produce smartphones, build computers etc.
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