Saturday, November 6, 2010

Beginning of a brand new Rally - Market Analysis for 8th November 2010 by Singaporeseeds

Daily chart for Dow

Daily chart for S&P

Daily chart for NASDAQ

From my market analysis last week:
"Although the charts are pointing to a major correction in the indexes, this may also be a setup for a major upward movement in the next few days."

The Dow made a 200+ move last Thursday that totally wiped out all the bearish divergences on the indexes. Luckily the unreliable internet connection in KL was reliable on Thursday evening and I got out of all my short positions. The trigger for this move is the Fed purchase of USD 600 billion worth of bonds and the Republican win. This huge up day clean broke all the resistance levels that had been hanging over the indexes over the past few weeks.

This week, I’m expecting the indexes to continue this rally. It may come back to test support at 1215 on the S&P but I do not think it will even come close to breaking this support level. My first target will be at 1350 on S&P and then 1550.

Gold (GLD)
Daily chart for Gold

Following the announcement of the Fed pumping in USD 600 billion, gold gapped and rallied more than $40 on Thursday. This reflects the inflationary expectations of the market. I am expecting inflation to spiral out of control over the next few years and anyone holding onto physical assets (real estate & commodities which includes gold & Crude oil) will benefit from this. Gold (GLD) is still onto my final target of 143.

Crude Oil (USO)
Daily chart for Crude

Crude oil gapped and rallied on Thursday following the announcement of the Fed purchases. It should rally together with gold over the next few weeks. Target at 39.40 on USO.

Dollar (UUP)
Daily chart for the Dollar

The dollar tanked on the announcement of the USD 600 billion Fed purchases as this would further dilute the value of the dollar. It had hit my first 2 support levels 22 and 21.94. I believe it will hit the final support level of 21.78 sometime this week.

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