Charts I’m Watching: October 17, 2011

UPDATE:  10:00 AM

The Dollar Index (DX) found support at the fan line we were watching.  There’s plenty of resistance up ahead, but the channel it’s in indicates a potential meteoric rise.  Note that this channel is at the exact same slope as every other from the past 4 years.

I expect a rise to the 87 area, sometime in the Dec 11 – Mar 12 time frame.  This part is tricky, as previous rises have channel surfed.  In the summer of 2008, DX accelerated when it shifted to a parallel channel to the left – not once, but twice.  Eventually, it returned to the original channel to complete the move. 

The Oct 09 – Jun 10 run did a bunny hop to the right, effectively slowing the pace of the rise.   The Oct 10 – Jan 11 rise fizzled after a respectable 10% run.  We’ll keep an eye on this one.


Updated chart on AUD/USD.  Start with a pretty cool 20-year trend line…

Toss in some neat fan lines, channel and some Fib retracements…

Makes a pretty compelling case for a reversal.

More later.


Charts I’m Watching: October 17, 2011 — 5 Comments

  1. Thanks for the post and analysis Pebble.

    Hook, I appreciate the bull perspective. I have been doing a lot of searching for a TA bull case the last few days and had come up empty handed. The Zweig maybe the first.

  2. This is from Parker Binion:

    The signal is based on a 10-day exponential moving average of the percentage of advancing issues compared to advancing + declining issues.

    When the 10-EMA rises from below 40% advances to above 61.5% advances within 10 trading days or less, the signal is activated.

    According to Steven Achelis, there were 14 such signals between the 1940s and 1984 which produced an average 24.6% gain in stocks over an average of 11 months from the date of the signal. According to Achelis, “Zweig points out that most bull markets begin with a Zweig Breadth Thrust.”

    The next signal after 1984 came in March of 2009. It produced a ~50% gain over the next ~13.5 months.

  3. I read about that, haven't seen any historical data on effectiveness of the call. Anyone out there have any references?

    The McClellan Oscillator shows a similar swing, but under certain circumstances, this has been a great signal of a downturn.

  4. Pebble, the excessive bearishness caused a Zweig Breadth Thrust. Last one was in March 2009, before that 1984. Do you have thoughts on this.