Considering that today was a post holiday half day of trading, it would not be a surprise to see a whole lot of nothing happen, and that is pretty much the way it went. The "good news" in Europe (bailouts are always good news in the market) was supplanted by news that yet another Euro country, this time Portugal, is on tehe verge of bankruptcy. The resultant drop in the EUR/USD pair brought about a similar Pavlovian response in the market, and with no one trading but computers, we went nowhere after that.
The weekly chart shows a similar lack of movement and volume, but is significant in that we had a second consecutive week of a successful test of the 10 week average. So far we have several possible patterns developing. This could be a long bull market correction, a double top, or the middle of a very long head and shoulder pattern. Unlike a few other bloggers, I will not make any "bold" predictions, because there is absolutely nothing in the charts that suggests which it will be.
\Since this was a short week and the other index charts haven't changed much, this week I will take a look at some other charts. Crude oil first got above 60 back in May 0f 2009 and has been stuck in the range between 60 and 90 ever since. Twice it has looked like it was about to break out, only to be thrown back. One thing I noticed was that the range we have been in for about a year, between 65 and 90, fits almost perfectly into the fibonacci retracement levels, and if that has any predictive value (which is dubious, at best), then oil has a potentail target here of 121. Of course, the grid doesn't say anything about a time frame.
The yield on the 10 year treasury has mad an ubrupt, and very big, reversal and move up.This is the exact opposite of what Bernanke was trying to accomplish wth QE2, and further moves up will have a devstating effect on the housing "recovery", and put the squeeze on deficit spending by Congress. It's about time the bod traders woke up.
If you draw a fibonacci projection over the last two pivot points in gold, you come up with a target of about 1420. the top in gold so far was painfully close to that, Does that mean that it is THE top? Not necessarily, and in fact I would be wxpecting another move up, but one thing it does is set up a potential entry, and gold consolidates here. One thing that is vital to survival in trading is knowing when to get into a trade, and when to get out. Unlike the gold bugs, who believe that gold has to go up no matter what, I am fully convinced that gold, like any other market, can go up and down, sometimes quite radically, and I have to get out quickly when I am wrong.
I was visiting some friends over the holiday, and missed most of the market this morning, but did have the occasion to watch CNBC. It was amazing to me to see how many "experts" are touting stocks like PCLN, because it has more than doubled in the last 6 months. Their rationale? "There is a little more upside here". Um, ok, but what happens after that little more upside is reached?They didn't bother with that. Thank heaven I do not own a television.
I will have the new highs update shortly.
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