The chart below shows SPY. Any rally will have to overcome two key levels of resistance - 98.35, 94.06
Last Friday, the powerful rally managed to cut through these two levels of resistance to reach 98.59. Being a Friday, traders were afraid to hold their positions over the weekend...hence SPY ended right below 94.06.
In my opinion, this is not good position to end the day. But any attempts to push the market down from this position is likely to encounter many layers of resistance below 94.06.
A rally next week will likely happen if commodities push higher due to speculation on the OPEC plan to reduce supplies.
Hence, I foresee a possible correlation between most commodity stocks and SPY.
Next chart shows DIG, an ETF that consists of key oil service companies and oil producers.
If crude oil manages to find support at 70, in the short term I expect commodities to rally if not move sideways.
The DUG position that I am still holding gives me time to exit if commodities rally. Going long on commodities is a risky trade if your positions are not big enough or without leverage. I would recommend that, you don't hold your positions overnight if possible.
The EURO needs to get above 1.37 to confirm a trend reversal. If it breaks 1.335, then it is likely to resume its downtrend towards 1.3.
A chart of FXE shows that even if EURO were to remain around 1.35, it is still trading in a tight range and is due to fall further or bounce.
Here is an intraday chart during European trading time of the EURO that shows the price has just broken out of the symetrical triangle and is now fighting hard to get back above 1.3485. Anything can happen by the time US markets open, so do keep an eye on the EURO
7.04 am Updates: - Head and shoulders pattern has developed
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