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Technical Tuesday - May 22, 2018
Technical Tuesday Update
Volume 2, Issue 16
May 22, 2018
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Some indices such as the Nasdaq Comp., S&P 500 and MDY remain under areas of resistance but the Russell 2000 has been able to close above it. We need to see strong demand come into the Russell 2000 which would indicate the start of another leg higher. The Dow Utilities remain very weak and on the verge of starting another leg lower. We have included a chart of the XOP—S&P Oil & Gas Exploration & Production ETF as a proxy for energy equities, and it remains very bullish.
The CAC 40, DAX and Spain’s IBEX remain in areas of resistance. Italy’s FTSE MIB has been unable to close above its long-term target area near the 2015 highs and has started to reverse. We remain cautious these markets.
The Nikkei continues to hold up well and has potential to move back towards the recent highs. China’s Shanghai Composite remains vulnerable to more weakness and the Hang Seng is testing important support.
Brazil’s Ibovespa is about 2% away from important support, and down 8% from our initial cautionary note. The Kospi 100 remains vulnerable to more weakness from here.
We are on target with our upside target on WTI Crude Oil, and there is a strong possibility that the price can extend higher. Gold is in an important support zone that must hold for a bullish scenario to unfold.
Both the U.S. Dollar and the Euro are at potential inflection points. This is a zone to watch for a turn in each.