Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Wednesday, the 17th of August.
So here we are... We're in the middle of the month, it's the middle of the week, and the markets are stuck in the middle. Stocks rallied early today, but they look like they are failing now.
Gold rallied again to test the $1,800 an ounce level. It has now fallen back and looks to be on the defensive. Crude oil has also rallied and is now faltering from a key resistance area. Once again bank stocks look to be on the defensive. I'll also share a chart pattern in the bank stocks with you that does not look good.
So let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.
S&P 500
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
Please remember that the MAJOR TREND IS DOWN for the equity markets and that strong rallies represent shorting opportunities with tight money management stops. The Fibonacci retracement zone between 1,223 and 1,253 should halt any further upside action for this index.
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SILVER (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 65
Intermediate term traders should be on the sidelines and out of silver at the present time. A Chart Analysis Score of - 65 indicates a two-way market and a trading range. Let us be patient and wait for our Trade Triangles to kick in and give us a solid buy or short signal.
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GOLD (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 90
Gold once again moved up to challenge the highs of $1,800 and was pushed back for the time being. This market is beginning to look a little sluggish and if this recent test of the highs fails, it could be a fairly important turning point for this market. We have been indicating that we felt gold was going to make its high in the 3rd quarter of this year and we may have seen the high for the time being. Both intermediate and short term traders should protect profits with tight money management stops.
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CRUDE OIL (SEPTEMBER)
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
Crude oil has once again moved back inside the Donchian trading channel and has two very important Fibonacci retracement levels to contend with. I am looking at $88.32 (50% retracement) which was hit today and $91.28 (61.8% retracement). For the moment these two levels should stop any serious sustained rally. The longer term trend for this commodity is down based on our monthly Trade Triangle technology.
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DOLLAR INDEX
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 60
The 73.50 level continues to act as support for the dollar index. This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of -60 we would want to be approaching this market using our Donchian Trading Channels as well as our Williams %R indicator. The index remains below its 200 day moving average while our longer-term Trade Triangle remains positive.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
The Reuters/Jefferies CRB commodity index is now back in an area that should provide resistance. We are using our Fibonacci resistant levels at 332.95 (50% retracement) and 337.14 (61.8% retracement) as turning points. We want to remain patient and let our Trade Triangles do what they do best.
As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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This is Adam Hewison for MarketClub, I'll see you tonight right here at 5 p.m. Have a great trading day!
Every success,
Adam Hewison
President of INO.com
Co-founder of MarketClub.com
I think the Fed is caught in the middle. Another round of QE with the dollar index at 73 and oil at 85 has inflationary consequences on US consumption which leads to more defaults and the depreciation of realty assets. This time around the dollar is not benefiting from a decline in US equities. Why? I believe it's because the increase in USD money supply from QE1&2 is parked in commodities and agriculture reinforcing price levels that defeat short term supply and demand factors. Also, boosting profits for multinationals via US currency devaluation has reached an inflection point that threatens US consumption. Where do we go from here as the euro holds strong against the dollar despite the debt crisis of the PIGS. It makes sense for the markets to be stuck in a sideways trend during a time of economic self-preservation, but printing money eventually forces a process of decoupling where foreign investment and carry trades can no longer be used to manipulate or preserve the value of the reserve currency. Some say it is impossible to collapse the USD, but is it?
Hump Day... Hump Week... Hump Month... Sounds interesting
We need to buy 1 trillion ouncesof gold as soon as we can