Jun 2009
Broader Market Analysis: Indicies Looking Very Suspect Heading Into Second Half Of The Year
14/06/09 10:13 PM
As we head into the second half of this year, there a
few trends that seem to be very prominent:
Let’s first revisit a monthly chart of the S&P. After that bearish double top that we experienced in late 2007, we have seen a precipitous selloff, which in turn lead to a test and a break of the lows set back in 02/03. We eventually reached a short-term bottom in the early stages of this year, something that was no doubt influenced by the Obama presidency, bank bailouts, stimulus projects and his otherwise hollow promises to save the free-world from an economic catastrophe. There are a couple of things on this chart that stand out, the first obviously being that double top, and the second being the low volume rally we have seen from 665 to our current level of 950. The fact that this rally has been on much lower volume than the heavy selling we saw in 2008 is by itself enough to be cause for suspect. Furthermore, after looking at this monthly chart more closely, it looks as though we could be in the process of forming a bear flag on the S&P. Should this be the case, then we could actually see a bit more upside in this market with an eventual test at 1000 before continuing downward towards a retest/break of the lows.
An Elliot Wave analysis seems to correlate with the monthly analysis above, as it looks as though we are in the final stages of the fourth up-wave. Should this be correct, the fifth and final leg down shouldn’t be too far off. That weekly downtrend will come into play around 1,000, not to mention the fact that many traders will likely look at the S&P 1000 level as an area of phycological resistance.
On a intraday chart, things have been fairly choppy, but objectively, the trend is up and continues to be up for now.
Gold on a weekly chart continues to look very bullish. The inverse head and shoulders that we mentioned way back in February is still in play and a break above 1000 would lead a flurry of buying.
On a daily chart, Gold seems to be consolidating around that $90 level as well as its 50-day moving average. If you look closely, you will notice that another inverse head and shoulders seems to be in the final stages of forming that right shoulder. We will be looking at the 50-day as an area to start getting long gold again for a move and a break above 1000.
The dollar continues to be one of the worst looking charts out there. It seems as though global investors (aka China and Co.) are beginning to realize that the United States isn’t as safe of an asset as was once thought. Longs beware.
So in a nutshell, the longer term trends seem to point towards a rise in the price of gold, and a drop in US equities and the dollar.
That about does it from here.
Good luck.
Let’s first revisit a monthly chart of the S&P. After that bearish double top that we experienced in late 2007, we have seen a precipitous selloff, which in turn lead to a test and a break of the lows set back in 02/03. We eventually reached a short-term bottom in the early stages of this year, something that was no doubt influenced by the Obama presidency, bank bailouts, stimulus projects and his otherwise hollow promises to save the free-world from an economic catastrophe. There are a couple of things on this chart that stand out, the first obviously being that double top, and the second being the low volume rally we have seen from 665 to our current level of 950. The fact that this rally has been on much lower volume than the heavy selling we saw in 2008 is by itself enough to be cause for suspect. Furthermore, after looking at this monthly chart more closely, it looks as though we could be in the process of forming a bear flag on the S&P. Should this be the case, then we could actually see a bit more upside in this market with an eventual test at 1000 before continuing downward towards a retest/break of the lows.
An Elliot Wave analysis seems to correlate with the monthly analysis above, as it looks as though we are in the final stages of the fourth up-wave. Should this be correct, the fifth and final leg down shouldn’t be too far off. That weekly downtrend will come into play around 1,000, not to mention the fact that many traders will likely look at the S&P 1000 level as an area of phycological resistance.
On a intraday chart, things have been fairly choppy, but objectively, the trend is up and continues to be up for now.
Gold on a weekly chart continues to look very bullish. The inverse head and shoulders that we mentioned way back in February is still in play and a break above 1000 would lead a flurry of buying.
On a daily chart, Gold seems to be consolidating around that $90 level as well as its 50-day moving average. If you look closely, you will notice that another inverse head and shoulders seems to be in the final stages of forming that right shoulder. We will be looking at the 50-day as an area to start getting long gold again for a move and a break above 1000.
The dollar continues to be one of the worst looking charts out there. It seems as though global investors (aka China and Co.) are beginning to realize that the United States isn’t as safe of an asset as was once thought. Longs beware.
So in a nutshell, the longer term trends seem to point towards a rise in the price of gold, and a drop in US equities and the dollar.
That about does it from here.
Good luck.
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GM: The Reinvention Spoof
14/06/09 11:41 AM