Swing Trading Strategies & Stock Picks Since 2003

I don't think anything of great interest will happen today as we wait for the next interim top to be made. However we pinocchioed through the the lower channel on ES (June) shortly before the open this morning, and it looks considerably weaker now as a result.

The lower trendline on the rising wedge on the SPX 60min was broken before the open, and for this reason as well the rest of this week now looks much less bullish than it did before :

Gold was very interesting yesterday and broke the first rising trendline support. Overnight it has approached the second support trendline and if that breaks too we may well see a retest of the recent lows under 1050:

I think that we are approaching a very significant interim top in equities, but I don't think we'll make it today, and I'm doubtful about making it on Friday. I think that there is a very good chance indeed that this top will be signalled by two key indicators. The first is $BPNYA, the NYSE Bullish Percent Index, which has been in a gently declining channel since September. Since then it has been signalling the key interim tops and bottoms very well. It is close to the top of the channel now, but still looks at least one push up away from hitting it:

The other indicator is EURUSD, which has been in a steep declining channel since December. It isn't the strong positive indicator for equities that it used to be, nowadays when it trends down strongly then equities still tend to follow, but when it is trading sideways, as it has been over the last few weeks, equities have been rallying strongly.

Nonetheless, the last bottom on equities was signalled by EURUSD touching the bottom of the declining channel, and I think that there is a very good chance that the next interim top will be signalled by a touch of the top of the channel. EURUSD has been trading sideways for so long now that the top channel trendline has fallen to meet it, and it is now within easy striking distance at 1.376 and falling:

My favorite trading setups are trading channels with the channel trend. EURUSD in recent weeks is a good example of why counter-trend channel plays are much riskier propositions. I chart and trade patterns as well, rectangles, triangles and wedges mostly. I am watching two interesting rectangles at the moment, and one is the very longstanding weekly rectangle on XLF, which is testing the top border of the rectangle at the moment. I am expecting this to pull back within the rectangle for the close on Friday and will be concerned about the bullish implications if it doesn't:

The other rectangle that I am watching with great interest is the daily rectangle on TLT, which is approaching the lower trendline at the moment. It looks like a strong buy at 88.25 with a stop at 87.25. A daily close at or below 88 would be a signal to exit the trade as it would be a close below the rectangle, indicating to a target at 84.5. Long setups on rectangles are safer than short setups as they are mostly a bullish pattern, breaking upwards 69% of the time: