Trading The Technical With BofA: S&P500, EURUSD, Treasurys And Crude

by Tyler Durden

Since fundamentals have been irrelvant for years, the only possible (short-term) guide in a market in which the only thing that does matter is the Fed's balance sheet, are trends (as Hugh Hendry put it so appropriately) here are some technical trade ideas from Bank of America, on the EURUSD, Treasurys, the S&P500 and WTI.

First, on FX:

Looking for the EURUSD Top:

As we recently wrote in our 2014 Year Ahead report, we are US $ bulls for the year ahead and look for €/$ to trade lower toward the Apr'12 lows, at 1.2746, and, potentially, the 200m avg. near 1.2173. In the nearer term, we continue to see the gains from the 1.3295 Nov 07 low as corrective and temporary. The impulsive decline from the 1.3833 high on Oct 25 says the trend has turned bearish for the 200d (now 1.3248) and, potentially, the 17m channel base at 1.3065. An impulsive decline below 1.3694 confirms the trend has resumed lower, while OUR BEARISH VIEW IS INCORRECT ON A BREAK OF 1.3833.

Next, on Treasurys :

Head and Shoulders base says stay bearish 5yrs.

Since the Friday NFP, we have seen a sizeable, bullish turn in US Treasuries. However, despite this turn, the bigger picture trend continues to say, "STAY BEARISH". Our point of focus remains very much on the 5yr, where the 2m Head and Shoulders Base remains intact. Indeed, it is quite common to see a "re-test" of a Head and Shoulders neckline following the formation's completion. That is likely what we are seeing here. With the neckline currently at 1.447%, further yield weakness, price strength should prove limited before the larger bear trend resumes. We have taken this counter-trend move as an opportunity to add to our TYH4 short (recall we recommended going short in last Thursday's Liquid Technical Alert) at 124-20+ for an average of 124-17+. Our stop is 125-08 and our downside target is 122-06+.

Next, on the S&P500 (via ESZ3):

Watch SP500

Turning to ESZ3, the break of 1799.75 alleviates the correction risk and points to bull trend resumption. A break of 1812.50 confirms, targeting 1847/1850. Below 1799 means renewed range trading, while bears gain control below 1773.25

And finally, on crude:

Get ready to buy a WTI pullback

The CLF4 impulsive advance from 91.77 says the near-term and, POTENTIALLY, medium-term trend has turned bullish for WTI. In the sessions ahead, we will look to buy a pullback into 95.74 for 102.95/103.00 and, POTENTIALLY, the multi-year range highs near 110.55 and beyond. WTI bulls, GET READY.

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