Dean Foods

Dean Foods is at a critical point today. It held long term support at 17.45 which had been tested few other times this year. Today at the close it left a bullish hammer candle indicating a potential reversal but volume was just average. A solid break under 17.45 and DF can be headed to November 2008 lows in no time since there is no support below.

DYN Bullish breakout

DYN just broke out of a one year long inverse head and shoulders formation. Target price is around 4.00, which is a very good run from 2.39, closing price today.

CPCI:CPCE update

I was looking at the CPCI to CPCE ratio for clues to where SPX is headed in the near future. I found an interesting pattern during the July decline and bottom that seems to be repeating now. The pattern is a rising W pattern and would indicate that further upside is in store in the very near future. Also, notice the 9 day moving average has turned up again and didn't make it to the bottom of the channel, see August 24th post.

NSC

I was looking at NSC 2 year daily chart and realized how similar the current price pattern is to the one during summer 2008, see blue circles. After retracing about 50% from the March lows, NSC might be putting a top. If similarities continue, I would expect a bit more downside, then a temporal retracement up that would not make new highs and lower prices after. Something to consider is that the target of the nice inverse head and shoulders pattern has not been made or at least not yet.   

MON Bull Flag

Monsanto (MON) seems to be presenting a good buying opportunity as it has been tracing a nice bull flag. Buy around 77, potential target 87 and longer term target 94.

Copper / Gold ratio update

 

After today's rally, I looked at the Copper to Gold ratio to see if it was in fact confirming this rally. It looks like at the moment the ratio is not confirming this rally. The ratio has been making lower highs and lower lows while the SPX has been making higher highs. Obviously it has to do with the strong performance of Gold lately, and the ratio might catch up with the market later, but it also could be providing some warning signs.

SPX roadmap

Here is a weekly SPX Chart with my best guess road map for the rest of the year.

SPX Long term view

 

Above there is a monthly chart of SPX. Notice how the red and blue trend lines from 1987 top supported prices during 2002-2003 and 2009 bottoms. On the upside, SPX seems to be chasing after the red tred line, but first it needs to overcome significant resistance at the 1060 area market in red. After that a triple confluence is going to make really difficult for the SPX to move beyond the red circle. That area around 1120 is where the red trend line meets the downward green channel from the 2000 peak and the 2002-20003 and 2009 lows, it also happens to be the 50% fib retracement from the 2007 highs to the 2009 lows. On the downside, there is strong support in the 950 area, so a pull back in the short term will find good support at that level.

FSLR update

I posted the chart above on 8/23 calling for a retest of the long term trend line that had been hit numerous times. Well, below is the chart today.

 

FSLR actually broke the trend line temporally, which was expected since it had done the same thing the previous times and quickly reversed course to hit 140 today. If you are long, I would take some profits here as the stock is facing some resistance (rising trend line that I had marked as target). I believe it will pullback.

Short idea, CAT

 

CAT is hitting a long term trend line that is providing serious resistance. A short here can provide a good risk reward trade. Pick your exit. I wouldn't be surprised if CAT visits the lower side of the channel. On the other hand, a break above the long term trend line would most likely take CAT to the top of the channel.

ANR Bullish configuration

 

ANR broke out 23 back in May with good volume. While consolidating, it painted a bull flag during the months of May, June and July. In July, it broke out of the 23-30.5 range with even higher volume than the previous break out. Currently ANR is in a consolidation phase that looks very similar to the previous one. Unless the stock breaks the raising trend line decisively, it looks like a good buy if you can get in around 30.5 to 31 range for a good risk/reward trade. First target, would be 37.5 and if it breaks out of the range with good volume a second target would be around 43.5.

Cooper/Gold ratio

I found the Copper to Gold ratio to be a pretty good tool to confirm and/or anticipate turns in the SPX. Back in October 2007, this ratio was making already lower highs while the SPX was still making a higher high, non confirming the rally and signaling a reversal. In March 2008, the ratio was putting a higher low, while SPX was making a lower low, a signal that a bottom was near.

Fast forward to 2009. The Copper to Gold ratio anticipated the bottom in March by putting a higher low while the SPX was bottoming with a lower low at 666. Also, during the July correction the ratio made higher lows hinting us that it was just a correction and not the start of a more serious decline.

After this week's decline, is the ratio giving us any clues about the current decline in the SPX ?. Are we in a correction similar to July or are we at the start of a significant downturn ?. I will let you be the judge. In my opinion, the ratio is confirming that the market is turning and that lower prices are ahead for the SPX.