Investing for Survival: Monday Morning Chartology

Monday, July 7, 2014

Monday Morning Chartology

The Morning Call

7/7/14

The Market

Technical

Monday Morning Chartology

It was a joyous week in Mudville. Employment numbers were good; Yellen promised to never raise interest rates; the Fairy Godmother was turning sows’ ears into silk purses; and the S&P hit an all-time high. It is still a short hair away from the upper boundary of its long term uptrend; but what’s to argue. As of Friday’s close, that number in 1999; so clearly, it could take out both the upper boundary and the 2000 ‘round’ number at the same time.

Last week was rough on the long Treasury. As you can see, it confirmed the break of the lower boundary of its short term uptrend and finished below its 50 day moving average. TLT now re-sets to a trading range. You will recall that in a similar break two weeks ago, it recovered the trend line the day following the confirmation (which I then negated). Unfortunately, it then made a lower high, rolled over and here we are again. There is some small chance of a repeat; but it seems far more likely that a trend reversal has occurred. Notice TLT closed at the same level as the previous low. Any further move to the downside will re-set the short term trend to down.

While the bond chart seems to be gaining some clarity (however negative that might be), GLD is losing it. It traded back into the prior week’s trading range. That doesn’t necessarily have to be negative; but it certainly not positive. It does remain over its 50 day moving average which is a plus.

Not surprisingly, the VIX is a near mirror image of the S&P. Note that the lower boundary of its long term trading range (9.87) is the all-time historical low.