Terminological Inexactitudes

In the UK parliament it has been for a very long time been a rule that no MP (Member of Parliament) can call another MP a liar in the Houses of Parliament. Over the years a number of ways round this restriction have been used and my personal favorite is the term 'terminological inexactitude' as a euphemism for a lie.

Why does that spring to mind this morning? Well the Western Powers have been trying to be polite and conciliatory towards Russia over the Ukraine, despite Russia's breaking of their treaty commitments to Ukraine, and thinly masked manoeuvrings to try and seize a large part of the Ukraine for themselves, but that must be strained to breaking point this morning.

Two informal referendums were held by pro-Russia rebels in parts of Eastern Ukraine over the weekend and  unsurprisingly showed large majorities in favor of separation from Ukraine. Incredibly Russia then said that it 'respected the will of peoples' (to self-determination), which was only marginally less risible than if China had claimed the same. In Russia's case the bound and mutilated corpses in the many mass graves in the ruins of Chechnya might venture a contrary opinion if they were still in a position to. Perhaps Russia will clarify later that they are favor of self-determination only in the case of ethnic Russians living outside the current borders of Russia, which would deserve less incredulous laughter.

SPX effectively spent the whole of last week testing support at the daily middle band and the 50 DMA. There has been no push up from there, but it has not broken either. For the moment SPX remains in a narrow range waiting for direction. SPX daily chart:

What does last week's action tell us about that likely direction? Well the pattern setup on the SPX 60min chart is cautiously bearish, with a broken rising megaphone and possible double-top forming. Friday closed green, but the bears won slightly on points in my view as resistance was clearly at the 50 hour MA. As long as SPX holds under the 50 hour MA, the bears have the technical advantage, though it has now been crossed several times in the trendless action since the start of March. SPX 60min:

If we are to see a move up next rather than a move down, then the first target for bulls has to be to break up from the large falling channel on RUT. If they can do that then the two nested double-bottom setups there could take RUT to new highs, allowing SPX to try for upside targets in the 1900s. RUT 60min chart:

There is an entirely different, but similar in overall effect, setup on NDX. On the bear case NDX is making the right shoulder on a huge H&S, but on the 60min chart there is a smaller bull scenario with a falling megaphone and IHS that have broken up and have not yet been invalidated by a strong subsequent break down. If NDX should break back over 3613 with confidence then the obvious target would be at new highs. On the bear side a break below 3489 would target a test of the large H&S neckline at the 3414 low, and on a conviction break below that the targets would be a lot lower. NDX 60min chart:

Meantime we are waiting for direction and this is a daytraders' market, which suits me fine as I like this kind of two-way market action. At the least it is an enjoyable way to pass the time while we are waiting for a break to establish the next significant direction. The overall technical setup favors the bears here for that break in my view, but it could go the other way. If so the first sign of that would most likely be a break up from that falling channel on RUT, and I'll be watching that carefully.