Monthly Archives: October 2015

US Dollar Breakout

The PowerShares US Dollar Index Bullish Fund (UUP) is breaking out of a bullish triangle pattern on its weekly chart. The relative strength index and MacD are turning up and are above their centerlines, suggesting improving positive price momentum. The accumulation/distribution line is above its 21 period signal line and Chaikin money flow, a 21 period average of the A/D line is above its centerline, indications of improving positive money flow. A successful breakout projects to new highs.

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Index Update

The broader market indices pierced through overhead resistance like a light saber through butter last week, with leadership come from old line technology and industrial names. The S&P 500 index and the NASDAQ Composite are back above levels that acted as support for much of the year, but the Russel 2000 index is lagging, still unable to make new highs this month.

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There may be an indication, however, that the Russell is ready to participate, with the formation of a morningstar bullish reversal candle pattern on its weekly chart. This pattern is defined by a large down day, followed by a narrow opening and closing range “doji” candle, and completed by a large up day. It represents a transition from bearishness to bullishness. All the index needs to do now is break above nearby horizontal resistance.

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That Sign Post Up Ahead: The Stochastic Oscillator

A number of resistance levels on the S&P 500 chart are in the rear view mirror, and the index has reentered the horizontal channel range it had been trading in earlier in the year. A retest of the old highs is the logical assumption, but even if that turns out to be the case the road ahead might not be as straight as the one that got us here, and there could be a few detours along the way. Traders should continue to keep an eye on the stochastic oscillator. Crossovers followed by moves out of the overbought or oversold zones have signaled tradable short term momentum changes.

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Facebook Forms Another Bearish Engulfing Candle

Facebook (FB) has defined a short series of recent highs with bearish engulfing candles and it formed another in today’s session. This candle occurs when the “real” or opening and closing range of a dark candle encompasses the real or overall range of the previous day’s candle. Engulfing candles formed near the August and September highs and before a brief pullback in October. This latest candle comes after a return to the July high and if there is a subsequent pullback of any duration, it could initiate talk of a potential double top.

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