Analog Comfort - Currencies mostly consolidating declines against the buck into Wednesday, while US equities starting to show signs of potential topping yet again. Right now, we can't get overly excited with the very minor pullback in stocks, but a break below S&P 1740 should get the ball rolling. I have been waiting for the start of a major corrective pullback in equity markets and believe this move is just around the corner. Still, taking up residence in Camp Bearish has not been fun in recent months, and for the time being, it is a very lonely place to be. But there are some out there that share the same views and it is at least nice to know that I am not entirely alone. Zerohedge put out a great little piece on Tuesday, highlighting the power of analog analysis, and I would recommend that all of you take a look. Even if you don't agree, you would have to admit it is a compelling little read.
Subtle Breaks - Moving on, though we have seen no major moves in FX of late, there have been some notable developments which could be warning of a pickup in the buck's favor in the days ahead. While last week's EUR/USD break below 1.3460 got things going, more recently, Cable has taken out key support at 1.5895, now opening deeper setbacks into the 1.5500 area, while, AUD/USD and NZD/USD have managed to break down below some key multi-week lows, to expose a retest of the respective yearly lows. Another major pair in focus (also warning of USD strength ahead) is USD/JPY. However, things might be a little trickier in the short-term with this one. Technically, I still see USD/JPY locked within a multi-month triangle that has yet to be broken. My analysis shows triangle resistance at 100.00, and really only a break and weekly close above this level would officially open the door for a bullish breakout. Until then, proceed with caution and stand aside.