Friday, September 9, 2011

Start of Wave 3 of Downtrend - Market Analysis for 12th September 2011 by Singaporeseeds

Daily chart for Dow

Daily chart for S&P

Daily chart for NASDAQ

The markets made a lower high over the shortened week and broke the 20 day moving average support. The S&P dropped to support at 1150 and bounced off. We are not in the beginning of wave 3 of the downtrend. First support at August lows at 1125, 2nd support at 1072 and final would be at 1000. I believe we should reach this level sometime around Oct 2011.

Daily chart for Dollar

Quote from my previous market analysis for the dollar:
“The dollar is showing a huge bullish MACD and RSI divergence on daily charts. The downward wedge is now confirmed to be gone so we might see upward pressure on the dollar over the next few weeks.
Upward target at 22 on UUP. “

UUP closed at 21.91 on Friday. We should reach 22 at market open next Monday. This sudden spike in the USD shows the fear (and running to safety) of the current global financial situation.
My final target for the dollar on this uptrend would be 81 on dollar futures.

Daily chart for Gold

Gold is starting to form a bearish divergence on daily charts. On weekly charts, the Demark Sequential candle counting system shows that it had already reached the end of its current uptrend. This is the same on monthly candles. September also marks the end of the seasonal bullish cycle for gold.

For a better perspective of the kind of rally gold had been in:

Weekly chart for Gold

Gold may still hit 2000, but taking into account the bearish factors, I no longer believe gold is worth the risk. The gold rally is reaching parabolic proportions and the swings at the end of this rally would be getting increasingly volatile.

Daily chart for Silver

The rally in silver seemed to have lost steam. On daily charts, it seemed to be moving in a sideways fashion while RSI is moving downwards. This is not good for silver and with the dollar expected to rally, I believe we should see weakness in silver over the next few weeks.

Daily chart for Crude Oil

Crude oil hit resistance on Wednesday and failed to break above. However I believe crude oil should be moving in a sideways fashion over the next few weeks.

Daily chart for Natural Gas

Natural Gas is showing a bullish divergence on monthly, weekly and daily charts for both Natural Gas futures and its ETF UNG. As I’ve always reiterated on my market analysis, this is a long term play. (at least 3 years)
On Demark Candle Counting system, the rally should only begin after October 2011. Final target in 3 year is at estimated to be around 75.50.

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