Okay, I'm dregding out a late-night blog post here after spending dinner with my 3-year-old godson and, more pertinent to my present faculties, sipping whiskey with his father. I hope I don't get a BUI.
Ahem. Moving along...
A little over a week ago, yours truly suggested that a breakout by the NDX over 1950 resistance would fail and that once failed, the index would proceed to test the breakout level of a rounded base at 1875. Let's see how this played out, shall we?
The S&P 500 also spent the day testing support after its own failed breakout, and now looks to be forming a triangle. I will be watching these support levels very closely because if they fail in any notable way, the next area of meaningful support for both indices is the July low, and for the SPX this means potential new bear market lows.
I've also been keeping an eye out for signs that commodities may begin their first counter-trend rally, but I don't see any hints, yet. Just the opposite, in fact. Take a look at bellwether, copper. This chart shows the tail end of a massive ascending triangle formed by copper over the last two and a half years:
So copper is failing. How about oil?
If oil and copper are, indeed, on the verges of new major breakdowns, what do you think will happen to precious metals? The picture isn't pretty, I tell you. In fact, I unloaded the rest of my long trading position (a few shares of GDX) after lunch and bought some OTM puts. I'm not quite ready to short the metals outright. I'd rather do that into strength. If I miss a move, so be it.
That's the executive summary for August 26, 2008. Until tomorrow....