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Erik McCurdy
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Erik is the senior market technician for Prometheus Market Insight and has been performing chart analysis since 1995. The software program that he developed to monitor long-term stock market trends has correctly identified 92% of the cyclical turning points in the S&P 500 index since 1940. His... More
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  • Weekly Charts for February 19, 2011 0 comments
    Feb 22, 2011 1:46 PM | about stocks: SPY, DIA, QQQ, UPV, YINN, IEF, TLH, UUP, ULE, YCL, SGOL, GDX, USO, GCC

    Stock Weekly Chart Analyses

    The following technical and cycle analyses provide intermediate-term forecasts for the stock markets that we monitor. For short-term outlooks see the latest daily commentary, and for long-term outlooks see the latest big picture update.

    The S&P 500 Index

    Technical Analysis

    The index closed moderately higher again this week, moving up to a new long-term high and reconfirming the cyclical uptrend from early 2009. However, the rally from late August remains overextended and a violent correction will likely develop after it ends. Technical indicators remain moderately bullish overall, supporting a continuation of the advance.

    Cycle Analysis

    We are 25 weeks into the right translated cycle following the Intermediate-Term Cycle Low (ITCL) on August 27. The second Half Cycle High (NYSE:HCH) is imminent and could occur at any time, after which a 2 to 4 week decline into the next ITCL will likely follow. The window during which the next ITCL is likely to occur is now through March 18.

    • Last ITCL: August 27, 2010
    • Cycle Duration: 25 weeks
    • Cycle Translation: Right (bullish)
    • Next ITCL Window: Now through March 18.
    • Setup Status: No active setups.
    • Trigger Status: No pending triggers.
    • Signal Status: No active signals.
    • Stop Level: None active.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above current levels would reconfirm the cyclical uptrend and forecast additional gains.
    • Bearish Scenario: A close well below cyclical uptrend support near 1,300 would suggest the start of an overbought correction.

    The bullish scenario is slightly more likely (~60% probable).

    The European Top 100 Index

    Technical Analysis

    The index closed moderately higher this week, moving up to a new high for the cyclical uptrend from early 2009 and approaching congestion resistance in the 250 area. Technical indicators are now bullish overall, strongly supporting a continuation of the advance.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above current levels would reconfirm the cyclical uptrend and forecast a test of congestion resistance in the 250 area.
    • Bearish Scenario: A reversal and close below uptrend support near 237 would signal the development of a new downtrend.

    The bullish scenario is more likely (~70% probable).

    The Shanghai Composite Index

    Technical Analysis

    The index closed moderately higher this week, reacting further off of recent lows of the downtrend from November. Technical indicators are now slightly bullish overall, tentatively supporting a continuation of the reaction from January.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above congestion resistance at current levels would predict a move up to long-term downtrend resistance near 3,060.
    • Bearish Scenario: A close below the recent low near 2,710 would reconfirm the downtrend from early November and predict a move down to congestion support at the 2,600 level.

    The bullish scenario is slightly more likely (~60% probable).

    Treasury Weekly Chart Analyses

    The following technical and cycle analyses provide intermediate-term forecasts for the US treasury markets that we monitor. For short-term outlooks see the latest daily commentary, and for long-term outlooks see the latest big picture update.

    The US 10-year Treasury Note Yield

    Technical Analysis

    Yields closed moderately lower this week, retreating from recent highs of the uptrend from October. Technical indicators remain moderately bullish overall, supporting a continuation of the advance.

    Cycle Analysis

    We are 9 weeks into the right translated cycle following the Intermediate-Term Cycle High (ITCH) on December 17. The Half Cycle High (HCH) may have occurred last week, although we would need to see additional weakness or sideways consolidation during the next several weeks to confirm that development. The window during which the next ITCH is likely to occur is from March 18 to April 15.

    • Last ITCH: December 17, 2010
    • Cycle Duration: 9 weeks
    • Cycle Translation: Right (bullish)
    • Next ITCH Window: March 18 to April 15.
    • Setup Status: No active setups.
    • Trigger Status: No pending triggers.
    • Signal Status: No active signals.
    • Stop Level: None active.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close well above the recent high near 3.67% would reconfirm the uptrend from early October and forecast a move up to congestion resistance in the 3.84% area.
    • Bearish Scenario: A close below uptrend support near 3.53% would signal the start of a new downtrend.

    The bullish scenario is slightly more likely (~60% probable).

    The US 30-year Treasury Bond Yield

    Technical Analysis

    Yields closed slightly lower this week, retreating further from recent highs of the uptrend from August below strong congestion resistance in the 4.80% area. Technical indicators remain moderately bullish overall, supporting a continuation of the advance.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close well above strong congestion resistance at the 4.80% level would reconfirm the uptrend from August and forecast additional gains.
    • Bearish Scenario: A close well below uptrend support near 4.68% would predict a move down to congestion support in the 4.40% area and suggest the development of a new downtrend.

    Both scenarios are equally likely at the moment.

    Currency Weekly Chart Analyses

    The following technical and cycle analyses provide intermediate-term forecasts for the currency markets that we monitor. For short-term outlooks see the latest daily commentary, and for long-term outlooks see the latest big picture update.

    The US Dollar Index

    Technical Analysis

    The index closed moderately lower this week, moving down to a new low for the downtrend from early January. Technical indicators are moderately bearish overall, supporting a return to previous lows of the downtrend from mid-2010.

    Cycle Analysis

    We are 15 weeks into the cycle following the Intermediate-Term Cycle Low (ITCL) on November 5. The move down to a new short-term low this week confirms that the latest ITCL has not yet occurred, although the low is likely to develop sometime during the next several weeks. The window during which the next ITCL is likely to occur is from March 11 to April 29, with our best estimate being somewhere in the March 11 to April 8 range.

    • Last ITCL: November 5, 2010
    • Cycle Duration: 15 weeks
    • Cycle Translation: Left (bearish)
    • Next ITCL Window: March 11 to April 29; best estimate in the March 11 to April 8 range.
    • Setup Status: No active setups.
    • Trigger Status: No pending triggers.
    • Signal Status: No active signals.
    • Stop Level: None active.

    Intermediate-term Outlook

    • Bullish Scenario: A rebound and weekly close well above the recent short-term high near 78.50 would predict a return to the recent high near 81.20.
    • Bearish Scenario: A close below current levels would reconfirm the downtrend from early January and predict a return to the previous long-term low near 76.50.

    The bearish scenario is more likely (~70% probable).

    The European Euro Index

    Technical Analysis

    The index closed moderately higher this week, returning to recent short-term highs of the reaction from early January. Technical indicators are now slightly bullish overall, tentatively supporting a continuation of the reaction from early January.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above congestion resistance near 137.50 would predict a return to recent highs in the 140 area.
    • Bearish Scenario: A close below new congestion support in the 135 area would forecast a return to the recent low near 129.

    The bullish scenario is slightly more likely (~60% probable).

    The Japanese Yen Index

    Technical Analysis

    The index closed slightly higher this week, reacting off of strong congestion support in the 119 area. Technical indicators remain neutral to slightly bearish overall, suggesting that near-term direction is in question with a slight downside bias.

    Intermediate-term Outlook

    • Bullish Scenario: A rebound and weekly close above downtrend resistance near 122 would forecast a return to the recent long-term high at 124.40.
    • Bearish Scenario: A close below congestion support in the 119 area would reconfirm the downtrend from early November and predict additional losses.

    The bearish scenario is slightly more likely (~60% probable).

    Precious Metal Weekly Chart Analyses

    The following technical and cycle analyses provide intermediate-term forecasts for the precious metal markets that we monitor. For short-term outlooks see the latest daily commentary, and for long-term outlooks see the latest big picture update.

    Gold

    Technical Analysis

    Gold closed moderately higher this week, moving up toward recent all-time highs of the secular bull market. Technical indicators are now slightly bullish overall, tentatively supporting a continuation of the long-term uptrend.

    Cycle Analysis

    We are 3 weeks into the cycle following the Intermediate-Term Cycle Low (ITCL) on January 28. The long-term uptrend remains healthy, so the current cycle is assumed to be right translated, suggesting that a breakout to new all-time highs is likely sometime during the next 2 months. The window during which the next ITCL is likely to occur is from May 20 to July 8, with our best estimate being somewhere in the June 10 to July 1 range.

    • Last ITCL: January 28, 2011
    • Cycle Duration: 3 weeks
    • Cycle Translation: Right (bullish)
    • Next ITCL Window: May 20 to July 8; best estimate in the June 10 to July 1 range.
    • Setup Status: No active setups.
    • Trigger Status: No pending triggers.
    • Signal Status: No active signals.
    • Stop Level: None active.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above the recent all-time high near $1,424 would reconfirm the long-term uptrend and forecast additional gains.
    • Bearish Scenario: A close below long-term uptrend support near $1,327 would suggest the development of a more substantial correction or period of consolidation.

    The bullish scenario is more likely (~70% probable).

    The Gold Currency Index

    Technical Analysis

    The Gold Currency Index (NYSE:GCI) is a composite of gold prices in the currencies of 10 of the largest economies in the world as defined by GDP. It is therefore currency independent, reflecting the intrinsic value of gold as an international currency itself.

    The GCI closed moderately higher this week, moving above support at the lower boundary of the long-term uptrend. Technical indicators are now slightly bullish overall, tentatively supporting a continuation of the long-term uptrend.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close well above the recent high at 35 would reconfirm the long-term uptrend and forecast additional gains.
    • Bearish Scenario: A close below the recent short-term low near 32.80 would confirm the break below long-term uptrend support and suggest the development of a more substantial correction or period of consolidation.

    The bullish scenario is more likely (~70% probable).

    The Gold Miners Index

    Technical Analysis

    The index closed sharply higher this week, reacting off of strong congestion support in the 1,500 area and moving up toward recent all-time highs. Technical indicators are now slightly bullish overall, tentatively supporting a continuation of the long-term uptrend.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above the recent high near 1,730 would reconfirm the long-term uptrend and forecast additional gains.
    • Bearish Scenario: A close well below congestion support in the 1,500 area would suggest the development of a more substantial correction or period of consolidation.

    The bullish scenario is more likely (~70% probable).

    Commodity Weekly Chart Analyses

    The following technical analyses provide intermediate-term forecasts for the commodity markets that we monitor. For short-term outlooks see the latest daily commentary, and for long-term outlooks see the latest big picture update.

    Oil

    Technical Analysis

    Oil closed moderately higher this week, continuing a test of strong congestion resistance in the $90 area. Technical indicators are now neutral to slightly bullish overall, suggesting that near-term direction is in question with a slight upside bias.

    Cycle Analysis

    We are 25 weeks into the cycle following the Intermediate-Term Cycle Low (ITCL) on August 27. The window during which the next ITCL is likely to occur is now through April 22, with our best estimate being somewhere in the March 18 to April 8 range.

    • Last ITCL: August 27, 2010
    • Cycle Duration: 25 weeks
    • Cycle Translation: Right (bullish)
    • Next ITCL Window: Now through April 22; best estimate in the March 18 to April 8 range.
    • Setup Status: No active setups.
    • Trigger Status: No pending triggers.
    • Signal Status: No active signals.
    • Stop Level: None active.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close well above the recent high near $92 would reconfirm the cyclical uptrend from early 2009 and forecast a move up to the $100 area.
    • Bearish Scenario: A close below $87 would predict a return to congestion support in the $80 area.

    Both scenarios are equally likely at the moment.

    The Continuous Commodity Index

    Technical Analysis

    The index closed moderately higher this week, moving up to a new high for the long-term uptrend. Technical indicators remain moderately bullish overall, supporting a continuation of the advance. However, the uptrend has been rising at an unsustainable rate for several months, so a violent overbought correction will likely occur after it ends.

    Intermediate-term Outlook

    • Bullish Scenario: A weekly close above current levels would reconfirm the long-term uptrend and forecast additional gains.
    • Bearish Scenario: A close below uptrend support near 624 would signal the start of a potentially violent overbought correction.

    The bullish scenario is more likely (~70% probable).

    Stocks: SPY, DIA, QQQ, UPV, YINN, IEF, TLH, UUP, ULE, YCL, SGOL, GDX, USO, GCC
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