Update on trades
DVN 65/70 Nov call spread
debit 1.83 ROI 3.17
UPS doubled on Dec 60 call
SPY Nov 104 for 2.26
Jack here:
I thought I’d do a review of the key rally charts tonight as some very key trendlines have been breached in the last few days, and have reviewed the charts for USD, Dow, SP500 & Nasdaq.
I have included the full stochastics 14,3,3 & 5,3,3 as well as RSI & MACD on each chart, though I haven’t had time to mark them up. The MACD’s on the equity indices have all been negatively diverging for months, making lower highs when the indices have been making higher highs. At the same time volume has been declining on all three indices. The MACDs and declining volume tell us that this rally is most unlikely to be the start of a new bull market, and is unlikely to be sustained without at least a deep correction at some point.
The stochs on the equity indices are all oversold or near oversold and are turning or ready to turn. The stochs of course can remain overbought or oversold for long periods, but until the October lows are broken, and they have not yet been broken on any of these three indices, that indicates towards a short term rally at the least. The RSIs are the lowest on Nasdaq & SPX since July, and on the Dow are near the July and September lows.
Firstly the Nasdaq:
The Nasdaq is in the worst shape of the major indices. The lower channel of the rising wedge for the rally has been decisively broken, and the expanding wedge from the November lows has also been decisively broken. The October low has not yet been broken, but was touched today intraday:
Secondly the S&P500:
Major technical damage has been done to SPX. The lower channel for the rising wedge for the rally has been decisively broken, and the retest of the broken trendline last Thursday was rejected. On Friday the lower channel of the expanding wedge from the November lows was broken, and we have come back up to that broken trendline to retest it today.
Thirdly the Dow:
Interestingly, no technical damage has been done to the Dow at all. The lower channel for the rising wedge for the rally is intact. The expanding wedge from the November lows is intact, and we bounced off it intraday today.
Fourthly the US Dollar:
USD is particularly key as the very strong inverse correlation between USD and equities has held very firm since September 2008. That correlation could break down at any time, but it hasn’t broken yet, and until it does, USD will remain a very good indicator of the prospects for equities. 
Some technical damage has been done with USD, which has rallied strongly in recent days, and the upper channel trendline for the falling wedge for the decline since March has been broken, but the upper channel of the expanding wedge since November has not yet been reached. Instead USD has been hugging the significant interior trendline from the November low and failing to breach it in recent days. We are still a long way short of the October high at 77.5.
As with equities, the stochs on USD look ready to turn down and the RSI is at the highest since June – Aug. The picture from the MACDs is more ambiguous however.
SUMMARY:
Significant damage has been done to the rally in recent days, and we are near a very significant top for the rally, and perhaps the end of the rally altogether. We may have made that top already.
However the Dow is still in good technical shape, and USD particularly has failed to break up convincingly as yet. The real test here is the October lows for equities, and the October high for USD. Until those are broken this may still be just a significant decline, and new highs are not yet precluded. The writing is most definitely on the wall however.This rally is now rising on fumes IMO, if it can continue rising at all.
