Trading Ranges for Recent Leaders

Corrections are healthy, because they allow you to rotate out of laggards and into leaders. Many leaders have been correcting here and are now sitting in trading ranges that will offer pretty defined entry points, if they trigger.

Silver (SLV) and Gold (GLD) have sold off since breaking their uptrend a 8-day trading ranges. I am assuming that the trading range will be resolved as a result of what the Fed will say next Wednesday. This is either a pause on the way higher or a retest of the highs before a meaningful correction.



Silver and Gold are not the only leaders that are pausing after recent gains. Apple (AAPL) is also in an 8-day trading rnage that follows the selling accompanying its earnings release. You can see that AAPL is falling below the trading range. I have also included the 120-minute chart to show support levels - $303.02 and $301.15 need to hold.



China (FXI) is looking like it topped. You can see that FXI traded sideways for 14 days and then sold off hard on Tuesday as the Dollar finally rallied. This trading range is now resistance. Watch FXI closely for failure from here.



China National Oil (CEO) has been a recent leader and been consolidating for much of October. A breakout will be obvious. The way CEO trades, if it is to extend this rally and not correct, it will most likely gap up to $214 -216 range the day it is broken out of this consolidation.



The US Dollar Carry Trade has been the key to the recent rally – where you borrow cheap US Treasuries and leverage the proceeds to buy risky assets. I think the Japanese Yen Carry Trade leading into 2008 amounted to over $800 billion in leverage. The Euro (EURUSD) has been a key beneficiary of this trade. You can see that the Euro has been in a 17-day trading range. It will either break out or break down and probably pretty soon. This will probably be the key driver for how recent consolidations of these leaders reconcile themselves.