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July 3, 2004
The overall pattern is one of consolidation around the 10000 support level: marginally lower highs at [c] and [e]; marginally lower low at [d]. This pattern can break out in either direction. Obviously, in an up-trend, an upward breakout is more likely but a possible reversal cannot be ignored. We may witness further marginal highs or lows and direction will only be clear when we have a breakout followed by confirmation, with a pull-back that respects the upper or lower border of the pattern.
Twiggs Money Flow is drifting lower.
Twiggs Money Flow is drifting sideways.
Twiggs Money Flow continues to signal distribution.
The yield on 10-year treasury notes is testing support, with a close on Friday below 4.50%. The Fed raised interest rates by a quarter percent as expected but undid the effect, to some extent, by uttering soothing words about increases at a measured pace. The yield differential (10-year T-notes minus 13-week T-bills) is still a healthy 3.2%.
New York: Spot gold closed up at $398.20. The metal has encountered resistance at the 400.00 level. The intermediate up-trend will require further confirmation, with a rise above Monday's high of 404.25.
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We have had a few distractions this week, so I will continue with the series on Point & Figure charts in next week's newsletter.
Notice anything different about the equivolume chart below?
The next update of Incredible Charts will include an improvement suggested by some members several months ago: equivolume bars presented as candlesticks.
- Both Open and Closing prices are displayed;
- The bar is colored blue if the Close is higher than the Open; and
- Red if the Close is lower than the Open.
- If the Close is equal to the open, the bar takes the same color as the previous day.
On Microsoft we can see that the recent rally is supported by strong volume. The stock then encountered resistance at 28.50 before consolidating in a narrow band between 28.00 and 29.00: a bullish sign.
A breakout, confirmed by a pull-back that respects support at these levels, would be a strong bull signal.
Failure to break through resistance at 29.00 would be bearish, while a fall below 24.00, would add further confirmation.
You are successful the moment you start moving toward a worthwhile goal
~ Chuck Carlson
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