The path of least resistance for US equities continues to be upwards, even if it is largely the result of the activities of liquidity provisioning algorithms rather than broad institutional participation.

The Russell 2000 is clearly the preferred play for those looking for the best bang for the buck when the markets are oblivious to any negative news, as the high beta stocks will outperform on the upside, but equally they will under-perform on the downside. So where might there be a level of serious resistance?

Looking at the long-term monthly chart, I would suggest that the annotation to the chart and the Ichimoku cloud formation could suggest that crossing above the 680 level may not be as easy to accomplish as the recent almost parabolic ascent since early February would suggest.



In yesterday’s commentary on gold I proposed getting long "close to the $1108 level". The intraday low in yesterday’s session was $1108.50 and the strong reversal since has brought the metal back towards a test first of the $1130 on the hourly chart, and then much more significantly this rally should, if it has conviction behind it, be able to take out the $1145 resistance.

Also worth noticing on the chart above is the technical divergence where the recent selloff failed to register a new low on the RSI indicator.

I have taken half of yesterday’s profits off the table and will be looking to remove the other half today if the $1130 level proves to be insurmountable in today’s trading.



One of the more amusing undercurrents in the news recently has been the increasing number of European politicians who are now calling for an outright ban on credit default swaps and a curb to the activities of the nasty speculators who are punishing the Eurozone currency and the bonds of some of the more profligate EZ member states. If the political elite in some of these states - specifically Greece - had not been so inept and corrupt for years then they would not be in such dire straits and would not be vulnerable to any "attacks" by speculators.

Similar commentary is found in some of the UK media where the continued decline of sterling is also blamed on unpatriotic traders in Canary Wharf and Mayfair. Sterling is on the loose again and about to break into the zone I identified in yesterday’s commentary.

In particular the EUR/GBP looks set to move back towards the 0.93 level in coming sessions.



I'll be watching USD/JPY closely today as a break above the 90.50 level could see a sharp acceleration to the upside for the dollar against the Japanese currency.



My preferred short candidate for coming session is Tenet Health Care (THC) owing to the concurrence of a bearish flag pattern and a break below the Ichimoku cloud formation.



The chart for Devon Energy (DVN) looks constructive for moderate gains on the long side.



Wendy’s (WEN) appears to be moving into a price zone where renewed selling should be expected.



Clive Corcoran is the publisher of TradeWithForm.com, which provides daily analysis and commentary on the US stock market.