Intermarket Update 10-28

• stevenplace
• October 28th, 2009

Some quick charts, and my intermediate term analysis. Check Monday’s for context.

With the break of support on the russel, we have formed a double top in small caps. This is indicative of further risk aversion:

TF

ES

For the S&P I’m expecting the 1035-1040 range to be a level of support. We have not breached the major trendline (IMO). If we break further from there, 1020 is a significant retracement level as well as a pivotal level in terms of price action.

NQ

Tech appears that it has the most left before we see support. The index is most likely held up from AMZN strength, but a lot of the NQ 100 components have started to roll over already. I’m waiting for 1660 – 1635 for evidence of support, although if the other indicies bottom prior to that we may find demand come in earlier (which I doubt).

DX

The dollar rally is coming near some trendline resistance on the dailies. On the hourly chart the DX has been consolidating, and a break below that support level would tell me that some strength in risk assets could be back for the short term. If we get a bullish continuation I’m expecting it to encounter some difficulty with that trendline. Overall my target on a corrective move in risk assets is 77.50.

So my thesis remains that in order for equities to catch a bid, the Russel needs to lead as it was the one to lead going into the pullback. Smallcaps did not confirm this latest impulse up and provide the largest risk in the market. The overall trend on the short term remains down, but now is the area in which I am looking for signs of a bottom. There is no evidence to confirm that yet, but I am on the lookout for a turn.

If we don’t turn and TF breaks support, then I would watch the support level of the ES (1040-ish) and then support of the NQ (1640-ish).

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