Saturday, September 25, 2010

Saturday Rock Blog: Green to Black (So High)

Wow, what a week! The S&P broke out of its four month range, pulled back to support, then followed through. This is exactly the kind of action that the bulls want to see and in September of all months! (September is historically the worst by far) Those who have been betting on a weak market around the November elections are now in a tight spot with a couple of months to go. The measured rule for this breakout is around 1260 which would place the S&P at new 52 week highs and confirm that the two year old bull market is still alive. Actually, the pattern of the past 5 months or so look like a very healthy and solid base out of which the next leg up can begin:

I haven't been long many stocks during the recent rally, instead I chose to short the dollar by going long EUR and AUD which has worked out quite well so far and I see no reason to exit these positions. The EUR seems to be doing something like a simple ABC correction to its longer term downtrend. Each phase thus far has been about 700 pips wide (1.19-1.26-1.33) so I am thinking it can hit 1.40:

The Aussie has just been fantastic for me, making new all time highs against the dollar this week. It broke out of a nearly perfect cup n handle formation and seems to be targeting at least parity with the dollar, perhaps higher:

I'll try to get some more charts up tomorrow, cheers!

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