Looking at the chart of the DOW here you can see that we are still within the descending wedge formation, but are knocking on the doorstep of an upward breakout. Also, you can see that the shadows are all rejecting lower levels. One caveat to this week's ending was that volume on Friday was fairly weak given the large move. I think that we are going to see a slight sell off early next week before attempting to make to move upward again.
The Commodity Index is sporting a very nice hammer formation. Moreover, it successfully tested the midpoint of the bullish engulfing pattern of last week. My target for this is still around the 475 level.
OIH is still a long of mine that has taken a beating this week, but I am still confident in my price target around $85 or higher. Oil cannot keep falling straight down. It's too unrealistic not to mention that this market needs strong oil to help make the move higher for equities. The hammer formation and high volume are suggesting a nice rally over the next couple of days.
The USD/CAD has been extremely interesting over the last couple of days. Members know that I shorted it around 1.27 on Thursday and again just below the highs around 1.30. The triple top formation is huge here! Notice the bearish engulfing pattern around Nov. 23rd that was confirmed by the shooting star on Friday. My target for this short term is 1.21 and much lower of the next couple of months.
CHF is also another short for my Members. What's interesting about this pair is that when the dollar started to get weaker on Friday and all the other currencies started adjusting, the CHF didn't move that much (if at all really). So, I think this late bloomer is due for a quick and sharp response early next week if the equities rally. My target still remains 1.17 where the moving average and Fib retracement level converge.
Just wanted to highlight a couple of long and short ideas that I sent out on last week. K is a great call right now with great volume and the bullish engulfing pattern. Traveling back to $46 or higher should be very easy for this stock.
BHI is also posting a nice hammer formation and should rally with Oil.
CAM is just under its Fib retracement level which may be a risk for this long, but the bullish engulfing pattern and triple bottom presents a great risk/reward situation for this stock.
Some short ideas down given the markets rally. DHI has rallied up nearly 100% since its recent lows in early Dec. It's also hitting up against strong resistance and cannot maintain this straight up move for that much longer. A $6 target is a very realistic short trade target.
And finally AZO. This has rallied very strong this week but is now bumping up against both its 200 day moving average and its Fib fan levels. Also notice the shooting star pattern from Thursday that hinted at a reversal. My put orders for this didn't go through at the end of the day so I'll have to wait until Monday's open to short this down to $105 or lower.
Okay, I hope all these charts were helpful and give you some good ideas for next week. Happy Trading!
