Tuesday, August 2, 2011

2 August (Tues), Evening summary

Today’s Wall Street action was a merciless knife through the soft butter of trendlines galore. At the 4p EST closing bell, the S&P 500 was 2.56 percent lower, while the DJIA and NASDAQ gave up 2.18 and 2.75 percent, respectively. Financial futures contracts continued tip-toeing lower through the after-hours market.

Among the casualties was a 9-month price channel on the S&P 500 E-mini futures contract (/ES) – the line is coloured yellow in the chart below. The June nadir of 1252.25 was undercut as well. After-hours trade brought /ES to the round number of 1250 and several ticks below. The next significant price-channel support on the daily-bars chart appears a good distance away, near 1225.

/ES, daily bars:

The gold contract (/GC), sometimes a measure of risk aversion and other times one of risk appetite, today rallied in vertiginous fashion; clearly the zeitgeist of today's session pronounced the yellow metal as a safe harbour. In fact, gold has rallied so much in recent days that the current price -- about $1660 an ounce (yes, already so high!) – kisses a significant upward-sloping price channel on the daily-bars chart. As such, price action is at heightened risk of creating a short-term top.

/GC, daily bars:

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