S&P 500 Update and a Few Patterns

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Notice the RSI on the SPY chart. The weekly RSI has become overbought and now has a nice bearish divergence. It also has the right "look" to me to lead to a top. If either of the dashed red trendlines break, then that could spell trouble for stocks. Also mid June is a time relationship that is intriguing for a large complex correction to complete based on the time of the previous sections. So we are nearing that time zone.

The CRB commodity index is in a similar position but has already had an explosive downward retracement of the last little wave up in less time than it took to form, indicating a change in trend to the down side for the intermediate term.

Treasury bonds look like they have a little left to rise at least. However, if/when QE2 ends in the coming weeks and the government buying of bonds subsides, that theoretically could leave some air underneath bond prices. I'll update that market as it unfolds. Things don't always go the way you think they would.

Bottom line right now, expect stocks and commodities to back off or get hit very hard in coming months, and expect a serious lift in the US Dollar. The technical analysis is confirming the sentiment on this now.

Below I am noting a few nice looking patterns on some stocks.

CVX showing a nice bullish set up on an ABC correction. Oil is at least short term oversold right now, and there are many oil related stocks showing similar patterns to this one. It looks like they have another push to new highs in them. If this pattern fails, then we probably have seen an important top.

MET failed to breakout of a large trading range and has now formed a nice upward ABC gartley pattern that could make a top here and move back down to the bottom of the range. Some other stocks in this sector look set to take a dive as well (AFL and HIG).

OSG looks like it may be making a long term bottom. It is just reversing off a tight resistance zone right now. If it breaks above the down trend line of the correction since 2010, then that would be a strong sign this is headed up in the long term.