Thursday, 15 July 2010

SP Index - Trying to define the trend. + Betty Grable (GBP/USD)

First my gratitude to Michael for pointing out that the NYSE Advance-Decline line I used in my analysis from a couple of days ago was for all NYSE securities, this includes heavily interest rate sensitive securities such as ETFs and the like. Traders Narrative has previously written a piece last year which refers to this difference.

If I look at the the NYSE Advance-Decline line for Operating Companies instead the price action of the past 2 weeks looks less bullish than my earlier analysis suggested, however it still in my eyes looks like price action in the past 2-3 months look corrective rather than a trend change. The charts below show the comparison of the NYSE All securities cumulative Advance-Decline line  Advance-Decline line (Top Chart) versus the NYSE (Operating Companies) Advance-Decline line (Middle chart). I have also added a chart of the NYSE index at the bottom.  -

Looking at some of the many many blogs commenting on Equity direction one finds much debate and confusion on where we are now and where we are heading. This is understandable, price action has been confusing, I myself have veered between a bullish outlook and bearish outlook recently, though with an overall bearish bias. Right now I am neutral, there are just too many mixed signals. FWIW worth I believe above 1130 could see this take off back toward April highs and maybe higher (before eventually revisiting 2009's lows at a minimum), on the other hand a move back below 1040, and definitely 1010 then the downside is favoured. 

Finally Betty Grable has flown these past few days (Unless you've worked in the London FX markets you probably have n't a clue what I'm talking about: - Betty Grable = GBP/USD FX Rate). Since posting a low near 1.4950 on Monday the GBPUSD has soared to 1.5350. (See top chart below).  Looking at the lower longer-term chart, it can be see that GBPUSD has broken up the downtrend line which connects 2008s pre-Lehmans crash high, and a series of highs from late 2009. Additionally recently it broke up above the 100 day SMA and held a re-test, this is encouraging for the much bigger picture for GBPUSD.



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