Saturday, October 22, 2011

Beginnings of the next rally - Market Analysis for 24th October 2011 by Singaporeseeds

Daily chart for Dow

Daily chart for S&P

Daily chart for NASDAQ

From my last market analysis:
“I was in China on business last week and was not able to write my market analysis. Anyway the market rallied back to resistance at 1,215 on S&P last Friday. There is significant resistance at this level. If we break above 1,215, the downtrend since July 2011 would have ended and I would be back as a bull. However as of yesterday, we are still down.
We should be moving back to 1,100 in the next few sessions with a bounce at 1,174.
Since August 2011, the S&P had been trading in a range between 1,215 and 1,100. I now believe we would still be in this range for the rest of the year. However whether it goes up or down in 2012 remains to be seen. I would believe the direction for 2012 will depend largely on the actions of the Europe governments over the next few weeks. As of now, I am favouring a down 2012 with targets of 980 and then 680 on S&P.”

Market analysis for this week:
The market broke to new highs on Friday. Looking at the daily charts since August 2011, the indexes seem to have formed a double bottom with bullish divergence on MACD and RSI. On RSI, we are still within the downward trendline. Other than that, the downtrend seems to have all but ended.

If this rally is to be sustainable, there should be follow through so if Monday closes up. There is a high probability that we are at the beginning of the next rally that should bring us up to 1,370 on S&P.

Resistance at 1,260
Support at 1,215

Daily chart for the Dollar

Quote from my last market analysis:
“We should see the 50 day and 200 day moving average cross on UUP in the next few sessions. On dollar futures, it had already crossed. This is very bullish for the dollar and I think should bring the dollar up over the next few sessions. However there is significant resistance at 22.50 so I would be watching carefully if the dollar is able to break above this level.

I do have a final target at 23.50 on UUP by the end of the year.”

Market analysis for this week:
UUP gapped below its 50 and 200 day moving average. This is very bearish and might bring the dollar back to it’s August 2011 lows at 21 for UUP.

Daily chart for Gold

Quote from my last market analysis:
“Gold made a double top pattern and price is now moving up to test the base of this double top pattern at 165. Should it fail to break above this level, we should see gold at 145. I expect this should happen in the next few sessions.”

Market analysis for this week:
Both gold and silver had been range-bound for the past month. This is not a surprise given that both gold and silver had just a huge move over the few months up and then down.
At this moment, both precious metals still look bearish, with the 20 day moving average forming a resistance level to both metals. I would expect both gold and silver to move down over the next 1-2 weeks.
Target 152.50 for GLD.

Daily chart for Silver

From my last market analysis:
“As for SLV, my target is at 18.60.”

Target still the same.

Daily chart for Crude Oil

From my last market analysis:
“Crude formed a bullish divergence over the past few weeks and broke above its long term downtrend. (purple trendline)
We should see crude find support over the next few sessions before rallying to 37.”

Market analysis for this week:
Crude found support at the 50 day moving average on Thursday, forming a hammer, followed by a bullish confirmation on Friday. We should see crude (USO) move up over the next few sessions.

Target 35.17

Daily chart for Natural Gas

My last market analysis:
“The bullish divergence on RSI and MACD should be a signal for higher Natural Gas prices soon. This is the same for weekly and monthly charts.

We should see the start of a multi-year rally for Natural Gas by the end of the year. As I’ve reiterated numerous times, this is a long term play so be prepared to keep some gas for a couple of years.”

Analysis is still the same.

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