Sometimes Markets Don't Make Sense

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Tuesday, the 20th of September.

Sometimes markets don't make sense.

Commentators tend to think they have to make comments on every single blip in the market. Sometimes it's just not possible to put a handle on what drives a market on any given day. Today maybe one of those days when the news that came out was not particularly positive, yet the general market moved higher.

That was not the same story for the bank stocks that reflected the downgrade by Standard & Poor's for Italy overnight. The International Monetary Fund (IMF) also warned of continued economic weakness. And then the market's rally. Like I said earlier, sometimes it is impossible to tell what's going to happen on a day-to-day basis.

You have to look at the big trends in the market to help you when the market doesn't make sense. And right now the big trends continue to remain negative for the equity markets and positive for the gold market. Those two factors have not changed as of this writing.

We have discussed perception many times before and this is one of the most powerful elements in any market. One only has to look at the recent example of Netflix to understand how powerful perception can be in the market. In fact, it is one of the stocks we will look at today to show you just how our Trade Triangle technology works and how it can benefit you in the future.

Now, let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.
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S&P 500 INDEX
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 70

The S&P 500 index once again challenged the resistance area around 1220. As of this writing, the market is currently trading at 1215. We do think perception is everything in the market and we believe that perception will once again turn negative on the equity markets. There's a whole mess of economic problems in the world and it is just a matter of time before we can't dodge them any more and equity prices will come down. Long-term traders should continue to be short or be out of the market completely, and in a cash position. Intermediate term traders should be on the sidelines waiting for either a buy, or sell signal based on our Trade Triangle technology.

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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 = Negative
Combined Strength of Trend Score = - 60

The spot silver market continues to consolidate and the potential exists for a small bullish divergence on the daily charts. With a Chart Analysis Score of -60 this market is in a trading range and we are currently at the lower levels of the Donchian trading channel. We may take a few days to consolidate, but we expect that this market will move up from current levels. We are close to a low cycle and would not be surprised to see a market bounce in the next several days. We want to continue to monitor this market, looking for an area to add to long positions. Long term traders should maintain long positions in this market with appropriate stops. Intermediate term traders should now be on the sidelines waiting for either a buy, or sell signal based on our Trade Triangle technology.

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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 = Negative
Combined Strength of Trend Score = + 65

We want to pay close attention to the gold market this week, as we feel it is very close to a low. We are at the lower range of the Donchian trading channel. This market is also oversold, with a possible bullish divergence on the Williams % R indicator. The MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days. We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long-term traders should maintain long positions with the appropriate money management stops in place.

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CRUDE OIL (OCTOBER)
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 65

The crude oil market is presenting a mixed picture at the moment with our longer-term monthly Trade Triangle negative and our intermediate-term weekly Trade Triangle positive. This has created a trading range at the moment. The crude oil market remains in a sort of sideways motion, but with a bias toward testing the lower range of the Donchian trading channel. The Williams % R indicator is stuck in the middle, giving no real clue to direction. Also pay attention to the MACD since it is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. We do not think that the crude oil market is ready to go higher, based on our long-term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.
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DOLLAR INDEX
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

The dollar index continues to consolidate above its original breakout point of 76.10. We are positive on this market and expect to see it move higher. We would like to see a close over 77.60 as that would indicate a new high close for this index and set it up to move to our initial target zone of 80.00. Longer-term this market looks poised to move much higher. This index is coming from a large energy field that is capable of carrying it much higher, possibly up to the 80.00 - 81-00 area. Short, Intermediate and Long-Term traders should maintain long positions with the appropriate money management stops in place.

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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 = Negative
Combined Strength of Trend Score = - 90

Cyclically this market has come back to an area where it should begin to find support. We are at the lower levels of the Donchian trading channel and also we are heavily oversold on the Williams % R indicator. I expect in the next few days we will see this market consolidate for a recovery rally. Short, Intermediate and Long-Term traders should maintain short positions with the appropriate money management stops in place.
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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 and I’ll see you tomorrow, right here with my weekend wrap. Have a great trading day.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub