Dip in the Uptrend - Market Analysis for 31st October 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Last week's market analysis:
“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”

Market analysis for this week:
S&P broke through resistance at 1,260 but stalled with a doji on Friday. On futures, the index is back down below the important 200 day moving average but as long as prices do not break below 1,215 the trend at the moment is still up.
We now have a record number of stocks moving in similar pattern. This includes gold and crude oil. Seems like everyone or everything is listening to news reports coming out of Europe and moving with it. The past 3 weeks had been mainly good news but with lingering doubts that the measures taken are not good enough.
I do not think the market has the momentum to rally any further without first pulling back. The rally over the last 3 weeks had been straight up without any dips. Most bell weather stocks are also showing bearish patterns over the past few days. We should get that dip this week.

Support at 1,215 then 1,200.

Daily chart for the Dollar


Last week's market analysis:
“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.”

Market analysis for this week:

The dollar is almost at its August 2011 lows. We should see support coming in for the dollar now. I think the dollar should be moving in a range between 21 and 21.75 on UUP.

Daily chart for Gold


Quote from my last market analysis:
“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.”

Market analysis for this week:
Gold is moving in a similar fashion to the market and is showing a pause right at its 50 day moving average. This is also at an important retracement level.
The current trend for gold is up, indicated by the bullish divergence pattern on MACD and RSI but it will depend on breaking it’s current levels for the uptrend to continue.

Resistance at 170 then 173
Support at 165

Daily chart for Crude Oil


Last week's market analysis:
“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.”

Market analysis for this week:
Crude oil made a huge up move on Monday followed by a gap on Tuesday which hit my target and got out with a fast and nice profit.
There is a range of retracement levels above crude oil followed by the 200 day moving average. We should see crude oil dip this week to around 34.50 to 35.

Daily chart for Natural Gas


Last week's 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.

Halloween Scare - 31 Oct 2011

The markets are doing a Trick or Treat!

The relief rally late last week did not follow through a second day after recording at least 3%. On Friday, questions and doubts about the Eurolution (European solution) precipitated and the market went sideways. It was an awesome day to take a holiday as it was really going nowhere before and during market open hours.

After mulling over the weekend, a few things are emerging, more doubts about the Eurolution are surfacing and it is showing in the currency and equity markets. Earlier today, Japan intervened in the Yen and that boosted the USD, triggering a quick selloff in the Euro which has recovered a little. I suspect that that is more to go later today.

Last Thursday, the ES closed just above the 200MA, and this was followed by a doji on Friday. The ES is currently at 1268, just below the 200MA and its close today should be hinting on the direction for this week...
Meanwhile, the weekly ES charts are bullish, the daily ES charts were bullish and overbought... hence, it looks like a retracement of sorts is incoming.

The rally has not really attracted a significant increase in volume and this is suspect to a relief rally. The ES open interest is still flat indicating that net bullish positions are not being opened with the rally. Correlating the USD (/DX) and perhaps the EUR./USD, the /DX futures had bounced off the major support line of 75 and is trapped between that level and 76.5.

I am watching the USD for now... as its breakout or breakdown is likely to indicate the longer term trend in the equity markets.
For now, I am staying out and expect some consolidation, if not a retracement in the equity markets.

Stay safe for now.

Have a great Halloween!


The MadScientist
31October 2011

Note: Any material posted here is of my personal opinion, and my opinion may differ or change without notice. These do NOT constitute a solicitation nor financial advice, and readers agree that these materials presented herePublish Post are intended for educational purposes only. For any investment(s) and related decisions or actions pertaining to investments, always consult your own financial advisors, brokers, etc.

Relief Rally - 27 October 2011

WOW... what a relief rally.

For those who do not know - yet... The Europeans have apparently come up with a plan!

Although this rally is huge at 2.5%, I would like to see it break the daily 200MA. This puts the previous model in some distress as the 200MA has been hit super fast, unlike in 2008.

Let's see how it goes before I make an analysis update... I do wonder if today will close over the 200MA, that might be telling.


The MadScientist
27 October 2011

Note: Any material posted here is of my personal opinion, and my opinion may differ or change without notice. These do NOT constitute a solicitation nor financial advice, and readers agree that these materials presented herePublish Post are intended for educational purposes only. For any investment(s) and related decisions or actions pertaining to investments, always consult your own financial advisors, brokers, etc. 

Midweek midmarket rollover wrap - 26 October 2011

It is interesting how things happen...

I was out on a dinner appointment with my cousin who just flew in from Bali last night and since it was a preholiday evening, I decided to take it easier and leave the iPad alone. By the time the evening was done and charts were up, I was amazed. The equity markets (S&P500) had reacted rather strongly to news from Europe, which by the way, we all knew was a lot of hope.


Below is a quick look at the ES (S&P500) futures... (click on chart to enlarge)

The weekly chart looks bullish until this week. Closing at the current levels would mean a really ugly candlestick reversal pattern.

The daily chart on the other hand, had a sizeable rally, followed by a stall and then a rather expected breakout, which appears to be failing. Early this week, the ES was rejected at 1255 and yesterday closed with a bearish engulfing pattern. While the Buy signals are clearly seen, they were of lower probability (higher risk). The daily indicators also suggest a potential turning point with the Stochastics crossing over, and the RSI rejected at the bearish resistance. A strong downtrend would be in force if the RSI breaks below 50 in this instance.

The 30 mins chart offer an interesting perspective... having a bearish divergence on Price to Volume over the past 3-4 days since the breakout. This was one of the indications that the daily Buy signals were not low risk entries. Having failed at the neckline resistance, selling pressure came into play, and today at the market opening, a confirmation of the selling pressure was seen. Price action patterns show a break of the 1222 support at time of writing, and this is indicative of a trend change. From this point, I would be watching for a ice hole failure test of the ES 30 min 200 MA, aboout 1228.


So far, it looks like a potential roll over is happening and a down close today would result in the daily Three Outside Down candlestick pattern. Similarly, the weekly chart out start looking ugly as the week progresses.


Glancing at the /DX, it looks ready for the 30 minute chart bullish divergence to start equilibrating, and the daily/weekly charts show that support is tested.


/CL (Crude) which had been rather stubborn is now looking and confirming a change in trend too, after failing its daily 200MA.


Similarly, TLT and VXX charts are responding with a significant turning point after finding support at the daily FiboEMA yesterday.


Heads-up!


The MadScientist

26 October 2011


Note: Any material posted here is of my personal opinion, and my opinion may differ or change without notice. These do NOT constitute a solicitation nor financial advice, and readers agree that these materials presented here are intended for educational purposes only. For any investment(s) and related decisions or actions pertaining to investments, always consult your own financial advisors, brokers, etc.

On a string of hope - 24 October 2011

Just a quick note from my iPad today...

Over the weekend, the European optimism based on hope propelled both the Euro as well as the ES futures further up from Friday. However, the hopes were dashed once European economic data released did not show a nice picture.

The ES now looks toppish, having further extended the rally from a failed rollover last Wednesday/Thursday. It looks mildly bullish if today holds the test of 1220, after breaking out of a tight consolidation range late last week, albeit on lower volume.

The Euro made a valiant rally on optimistic hopes and came right back down to the point where it started the early Monday rally. It is now testing the moving averages and may be consolidating over a broad range.

DX, the USD futures, is similarly testing the EMAs.

The equity market looks uncommitted to me, with mild bullishness that I would be watching for very quick reversals. I usually would stay on the side until a potential trend signal develops, but that's just me.

Be wary!

The MadScientist
24 October 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice to act as a consequence after reading these materials. The materials presented here are intended for educational purposes only.

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.

S&P500 rollover - 19 October 2011

I am writing through my iPad for a quick update...

Last post, it was highlighted that the latter half of this week should see a lower end to ES futures, and so it seems to be panning out this way.

On Monday, the ES (and the European markets) made a hasty reversal, then on Tuesday last night made a little bounce.

At the time of writing this (0420hrs ET), I am seeing a probable ES rollover. The technical picture on the ES 30 mins chart suggest that an open below 1210, and sustained selling pressure would complete the rollover. The ES is currently at 1215, facing a support of 1210 where the FiboEMas are. Breaking down and failing a consequent test would confirm the rollover.

Heads-up!


The MadScientist
19 October 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice to act as a consequence after reading these materials. The materials presented here are intended for educational purposes only.

Tipping Point - Market Analysis for 18th October 2011 by Singaporeseeds

Daily chart for Dow


Daily chart for S&P


Daily chart for NASDAQ


From my last market analysis:
“All 3 indexes went back up to test the 50 day moving average and fail. Market bounce is over for now. The EUR/USD, Crude oil and the market had been moving in sync for the past few weeks. Both EUR/USD and crude oil are pointing down right now. I had a bounce signal for EUR/USD mid-week, but the signal failed on Friday. Failed signals are more reliable than successful ones and we should see all 3 (EUR/USD, Crude and the indexes) move to the downside next week.
Final target still at 1,000 by end Oct 2011.”

Market analysis for this week:
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.

Daily chart for the Dollar


Quote from my last market analysis:
“I was expecting the dollar to dip before continuing the next leg up. But looking at weekly charts, the dollar is still very bullish (huge bullish divergence) with 4 more weeks of rally to go. This might be a strong rally up similar to what we experienced in Aug-Sept 2008.

Final target at 82.5 on dollar futures. This would be 23.50 on UUP.”

Market analysis for this week:
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.

Daily chart for Gold


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.

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 tested resistance at 32 this week and reversed back down. Target now at 28.”

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.

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.

Bull Dozer Rally – WMA 16 Oct 2011

Two weeks ago Thursday, in my previous blog post, I started with a short and sweet statement that we may be at the beginning of a sizable rally…and so it was, the bull came out and basked in the sun for the whole of last week!

As I was busy with an exam, I abstained from the markets and it is now time to look back at the week’s action to see what may be in store for the rest of the coming week…

ES (S&P500 futures)

Looking at the ES weekly chart (left), a major Gann swing point was recorded and a very bullish weekly candle closed after a bounce off the weekly 200MA. Together with a break into the bear flag, this rally appears to have technical legs, so to speak (see right panel, 30 mins chart).

The daily chart (middle) had a bullish divergence on the multiple MACD and had Buy signals early in the week, which was followed by a very strong rally that broke out of the FiboEMAs. The short term trend is up and steeply so, with a target about 1255 (on the ES futures), which coincides with a Fibonacci level as well as the neckline of the previous Head & Shoulders pattern. The daily 200MA should present a good resistance as well due to what is known as a confluence of resistance levels. This together with such a steep rally, is unlikely for the 1255-1260 level to be broken decisively and that is the next target point where a decision would be made whether to continue the trend, or reverse. Bear in mind (pun not intended) that bull rallies are not so steep and usually proceed in a more measured manner, whilst bear rallies are sharp and volatile. The current situation is reminiscent of the latter.

The first half of the coming week should be bullish as the trend should take another 2-3 days of rallies, and then later part of the week should stall or roll over to reverse. I would be watching closely about Wednesday.

DX (USD futures)

The real driver behind the seat can be thought to be the USD. The USD is affected by the Euro in forex, as well as money movements in and out of Treasury bonds and other “safe haven”reserve currency money market funds. Therefore, at a time of Euro crisis, I would track the Euro futures, in a recovery, I tend to fall back to the USD futures as it would reflect a clearer picture of the underlying money movements.

The weekly DX chart (left panel below) shows a failure at the weekly 200MA, and a major Gann swing point was placed after breaking two uptrendlines. Similarly, the daily chart (middle) is showing a steep decline (and hence a re-entry of risk on money into equities) heading into a resistance zone. Like the inverse of the ES charts, the 200MA is backed up with resistance zones. What is more interesting is that in the 30 mins chart, a clear bullish divergence is developing. This suggests that although more DX downside is expected, a reversal could be in force in the latter half of the coming week.

The MadScientist
16 October 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice proceed with anything else as a consequence of reading these materials. The materials presented here are intended for educational purposes only.


Charts by ThinkDesktop by TD Ameritrade IP Company Inc.

How now, brown cow? - Market Analysis 7 October 2011

Over the past three sessions, the S&P500 (ES futures), together with all other global markets had a fantastic rally and the release of the US Non-farm Payrolls and Unemployment data seems to have determined the direction for a fourth day... Yesterday, I posted before the market open that we may be at the bginning of a powerful rally and it is clear that that is happening right now.

Looking at the daily ES futures chart, it looks bullish, but I would be very cautious of the sudden steep bear rallies that usually catch buyers/investors off guard. The 30 min chart shows the 200MA tunring upwards but the MACD is weakening and a bearish divergence is formed. A breakout will put the ES back into the bear flag, and this is likely to be followed with a good retracement later.

Now, it was previously posted about an uncanny resemblence of the current S&P500 technical picture to a Q12008. This was posted on 19 September 2011 and it has been about two weeks so I thought that an update would be good, just to see the developments.
*Coincidently, Conrad Alvin Lim also did an update, see his blog here.
In that same post, I posted about breaking the bear flag and testing the previous August low, and that was exactly what the ES did. However, it appears not to be following through with the bear flag target, and instead seems to be following the really uncanny technical scenario of Q12008!

Now, what I took a long time to do today was to realign the charts side by side, then adjust the axes so that the magnitudes matched as much as possible and then did some comparisons... I put the snapshots into Powerpoint and then made some drawings which were directly copied and moved over to the right panel. Therefore, the comparison drawings are of the same sizes.

Below is the updated chart from three weeks ago...

You can see that the magnitudes are almost similar in time and value. However, the current situation appears to be of a larger magnitude than previously. The chart is suggesting that the ES should be looking for a multiple wave rally to find its way to the 200MA, which should be about 1225. Fatoring the volatility, it may stretch as far as 1250 which is a test of the Head & Shoulders neckline resistance.

Below is the forward looking chart to demonstrate how bad this may be going. There is no certainty that the current uncanny similarity will play out, but for now, it is a growing possibility. The axes are also alighed and the measuring bars are identical. What can be seen is that the current situation is larger in range and the pattern formed at a lower level than in 2008.

These are the possibilities that could unfold if a repeat of the technical picture is followed through:
1. The current bear rally should meet the 200MA at about 1225-1250 and fail to breakthrough, sometime in December 2011.
2. The "ice-hole failure" should bring a lower low by the end of Jauary 2012 (which would also give the January barometer a very bearish read for the rest of 2012).
3. A retracement should follow and break down of 1050 some time in late April 2012.
4. This would then allow a completion of the final leg at a low of 600 by October 2012.

Taking the above technical turning points and time analysis, note that the current dateline for Greece is some time in mid December. The October dateline appears to have been postponed with Euro leaders postponing a meeting to next month, as well as talk about recapitalization of the European banks.

Another coincidence, or not, was that I read about Gann's financial astrology and it was already predicted in his book Tunnel Through The Air (TTTA) that May 2012 would be a significant turning point in the financial markets.

In conclusion, this technical similarity to Q12008 was posted 3 weeks ago and the consequent 3 weeks to date followed through accordingly. How things would turn out over the next few weeks to months may serve as a guide, and we should review this at certain time points as it develops. My humble opinion is that the coming (bear) rally where the ES meets its 200MA, may be the last stop before the train falls off the cliff. Risks are clear and present, so start thinking and make plans. It may make a huge difference by next year.

The MadScientist
7 October 20011
*Updated with the 2nd half of this post on 8 October - from Capella, Sentosa*
Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice proceed with anything else as a consequence of reading these materials. The materials presented here are intended for educational purposes only.


Charts by ThinkDesktop by TD Ameritrade IP Company Inc.

Quick shot (up) - 6 October 2011

A quick note here that we may be seeing the beginning of a sizable rally.

See an earlier post where an uncanny similarity to 2008 was compared. So far, 2 weeks later, the uncanny similarity still holds! I will show an updated comparison chart later.

The price action yesterday show a coordinated roll-up of the markets yesterday, which had the USD hit a resistance and correcting, while crude and the ES futures making a headway rally. While I still cannot say the worst is over, I have to concede that it might be bullish for a while.

Today sees ECB announcements at 0745 ET, and US unemployment claims.
Tomorrow is action packed with Non-farm Payrolls and the Unemployment Rate.
For now, the charts are showing a decent amount of bullishness... Am watching closely for volumes and supports to follow.

The MadScientist
6 October 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice proceed with anything else as a consequence of reading these materials. The materials presented here are intended for educational purposes only.


Charts by ThinkDesktop by TD Ameritrade IP Company Inc.

RED OCTOBER - WMA 3 October 2011

There goes September! Here is October... Some call it Red October... Historically a month that has a knack for the most infamous crashes.

So, here is how we are faring with a long to short term view...

Below is the ES monthly chart. What is clear is that we just passed the third top, a lower high, and are now testing the monthly 200MA for the second time. If the daily 200MA is sacred, imagine what the monthly 200MA would be. IF October ends below the current level (likely to at this point), then the markets are really in deep bear territory which could last a lot longer than the previous rout in 2008. Notice also that the monthly MACD is turning for a crossover, risking a move into bear territory in the months to come.

The weekly ES chart shows a clear break of the FiboEMAs and multiple testing of the weekly 200MA which is starting to show a bearish inclination as it tapers downwards. A weekly sell signal was just generated last week after a late week sell-off.

The daily ES chart is most intriguing in my opinion. Remember the bear flag I wrote about on 18 September? Price broke down the flag and quickly retested the support-resistance, having broken into the flag. This probably threw many chartists into bewilderment and two days later, it failed that break. If I do not know better, a failed attempt (a test) is bad enough, but this was a failed break-in, which suggest much worse. In addition, the 200MA is now inclined downwards, and the MACD has had a bearish crossover in bear territory. It looks like a visit to the August panic low is in the cards over the next few weeks as we start a brand new Buy Setup.
The 30 minute chart on the right clearly shows on an intrepaday basis how the rollover was followed by a breakdown of the bear flag and the retest of the bear flag support-resistance. Price action patterns confirm a trend change.

Looking at the USD futures (/DX) would be good as the flood into "haven" bonds tends to result in a spike in the USD due to transactions that boost demand for the USD. From the monthly chart, a bullish divergence was observed months ago and had since resulted in a rally, followed by a higher low. At this point, the USD looks to have more breath to increase in the coming months.
The weekly DX chart on the right has a breakout of the weekly 200MA resistance and a bullish crossover of the MACD into bullish area.

The DX daily chart appeared to have gone parabolic and was about to retrace, however, last Friday's action suggests that a new top would be in place due to another rally wave. The daily MACD is clearly showing the extent of the USD rally.

Gold has seen an awesome selloff, and many reasons have been given for that. While expected to rally again, with the steep rally in the USD (/DX), Gold prices would face a lot of pressure as the initial panic drives money from an already parabolic Gold into Bonds. Looking at the monthly chart, a similar rally was consequently followed by a correction before another huge rally. This correction was 100% of the price spike and took about 38% of the relative time to the rally. Simply by projection into the current parabolic spike, the magnitude was two-fold, and if correction time was to be similar at 38%, then a very possible support would be at about $1200 and should end about April 2012. While this is just a geometric projection on my part, the weekly (and monthly) MACD have some way to correct.

Oops... I just realized that this snapshot was flawed.
In any case, it appears that the daily open interest have been recently dropping as Gold prices dropped ~10% in a week. This signals that shorts are closing their positions and that buyers are likely to appear soon. The 30 min chart shows a triangle with a potential breakout on Monday.
**I took this photo on Sunday, and in the Asian hours of trading, Gold had already broken out of this triangle. To demonstrate this, I am not inclined to replace this chart.

Crude monthly chart has a sell signal and is currently testing the monthly FiboEMAs. The weekly chart on the right has price breaking down the TDST support, with a sell signal, hence looking very bearish, at least for the rest of October.

The Crude daily chart has a nice "ice-hole" failure and the 200MA is rolling over and downwards. This puts crude in line with the weekly bearish sentiment.
The 30 min chart on the right panel shows price testing thrice the weekly TDST, and failing to break above, which again shows how bearish crude is for now.

Given the above charts, it is obvious that the USD is rallying due to money movements into bonds, and out of equities and commodities. The bear flag scenario or the early 2008 scenario is starting to play out in uncanny similarity.
Fundamentally, the news today is that Greece is not doing enough of cuts, and the panel of liquidity meets today to discuss if Greece qualifies for the next instalment due mid-October 2011.
Needless to say, outlook over the next two weeks does not look good and the markets are already moving.
Real question is... ARE YOU?

The MadScientist
3 October 2011

Note: Any material posted here is of my sole opinion, and my opinion may differ or change. This is NOT a solicitation nor advice proceed with anything else as a consequence of reading these materials. The materials presented here are intended for educational purposes only.


Charts by ThinkDesktop by TD Ameritrade IP Company Inc.