Will dollar strength continue? It's a question most effectively answered with chart analysis of the dollar Index.» Read More
There are some significant differences, but also similarities, in the behavior of the blue chip Dow Jones Industrials and the broader S&P 500 indices. Historically the most significant difference is in the way the 2009 recovery trend was defined.
The Dow's breakout in 2009 developed from an inverted head-and-shoulder pattern. The S&P's breakout, on the other hand, was a more classic one, breaking off above the downtrend line. this is important because it shows a divergence in behavior between the two indices - something we need to take into consideration when interpreting their current patterns.
Last week's occurrence of a second Hindenburg Omen in as many weeks has investors concerned if an Armageddon scenario is in the cards for the U.S. stock markets.
The Hindenburg Omen is a technical indicator used to foretell the collapse of the American market. The indicator is created by monitoring the number of stocks New York Stock Exchange making a new 52-week highs relative to the number of stocks making new 52-week lows. The omen is confirmed when both numbers are greater than 2.2 percent.
The Hindenburg Omen is specific to the NYSE, and the exact requirements of 2.2 percent often creates an illusion of reliability and has great emotional appeal. However, traders need to question if this type of "exactitude" is a result of a common statistical curve fitting called a "prima donna indicator".
Prima donna indicators, which only perform under very specific circumstances, should not be confused with robust analysis tools. The latter provides reliable results under a variety of conditions and in a variety of markets.
In recent weeks, the price of gold has rebounded from the support level of $1160, due to three main factors.
First is the confirmation that China has been buying gold and that it has become easier for people to buy gold. The World Gold Council estimates China produced 313 tons of gold in 2009 but demand is expected to be more than 420 tons.
Second, is the suggestion by the U.S. government that they will move into a second round of quantitative easing. This fear is combined with the developing double-dip in the U.S. economy as shown by the head-and-shoulder reversal pattern in the Dow.
Third is the call by American investment analysts at Goldman Sachs that gold could reach the price of $1,300. This is a conservative estimate, and just a few dollars higher than its recent high of $1,248.20.
The dollar continued its slide against the yen on Wednesday, moving within sight of a 15-year low versus the Japanese currency.
Just how low will the dollar-yen go?
The Shanghai Composite Index's recent breakout above the 2480 resistance level has been very strong, and there is high likelihood the uptrend will continue. However, it must be said that the index's chart shows a confused pattern and this makes it difficult to project current activity and set target levels.
Even though BPappears to have plugged its massive oil leak in the Gulf of Mexico, the firm continues to stay in the spotlight, with
BP's stock has lost about half its value since the Gulf disaster in April, or a $100 billion dollars. For investors, is it worth getting in now, or will the stock continue its sell-off?
From a chartist perspective, BP's stock has been the subject of "vulture trading," which pretty much means exactly as it counds. This is a trade that picks on the carcass after the stock's been killed by the market.
Seeing there's been quite a bit of interest in my recent comments on CNBC about the historical parallels between the Great Depression and the recent financial crisis, I thought it may be appropriate to elaborate further on the chart technicals behind the observation.
The causes may have been different, but the collapse of the U.S. markets in early 2008 followed the same behavioral patterns as the collapse in 1929. The recovery pattern seen in 2010, is also very similar to that developed in 1930.
The debate over where gold prices are headed has been a active one, with the bulls maintaining that fears of a slowing global economy will keep demand for the safe-haven investment strong; while the bears argue that the current price of gold, which has limited industrial use, is unsustainable in the long term.
From a chartist perspective, we're looking expecting a bullish scenario in the long term, but not without some selling pressure in the short term.
The Japanese yen has been back in favor in recent months, as continuing worries over the outlook of the global economy boosted demand for the currency.
The yen is hovering at an eight-week high against the dollar, and trading at its strongest level against the euro since 2001.
But a look at the performance charts suggest it may be time to pick up the dollar-yen trade, which is showing a very strong support level between 87 and 88 yen.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.