Breakdown
Thursday, February 4th, 2010In yesterday’s sector overview I commented that several sectors still appeared technically bullish despite last week’s heavy selling. After today, I don’t see anything that looks bullish on the equity side. Later this evening I will be scanning for short setups, and will try to post them before the open tomorrow.
The forex market is confirming the bearish environment for stocks, as money flows into the US Dollar and Japanese Yen. The Dollar and Yen each broke through important support/resistance levels against other major currencies, promising further strength to come. Check out these currency pairs, and the important technical breaches that occurred today (I will be shorting strength in any of these pairs):
- EUR/JPY actually broke major support last week, and had a major confirming move today.
- AUD/JPY broke down decisively through the 200 day moving average today.
- CHF/JPY looks like EUR/JPY, but a week later.
- AUD/USD found some support at the 200 day moving average, but looks set to head lower.
- GBP/USD looks to be in the process of breaking key support.
Looking at equities, it was selling across the board today. Yesterday I noted the bearish setup FXI. The China ETF sold off today on huge volume, promising more downside to come.
- XLI: Yesterday I said this one was holding up well. Today it is on the verge of falling off a cliff. This looks like a good short below today’s low.
- XLF: Still above the 200 day moving average, but for how long?
I am holding short positions in JPM and PFG, and a long position FXP, all from this morning. For the most part I was caught up trading the forex market, and then kitesurfing. Tomorrow I plan to be more prepared for equity trading, so check back for more short picks. For now, here are the JPM and PFG charts.
