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Friday, October 28, 2011

Friday Weekly Charts

Coming off one of the biggest gaines of the year, and being a friday, today was expected to be a quiet day, and for once it was, with not much happening. I did not annotate the chart so the standard pivot points would be more visible.  As you can see, we blew right threw the R2 level yesterday, and since there is no R3 calculated, we have virtually no resistance. The bad news, though, is the month is just about over, and we get new pivots on Tuesday. the other reason i didn;t annotate the chart is because I have no idea where we will see the next resistance, which may be a news event more than a technical event. 

Last week's weekly chart had "buy" written all over it, and it came through this week. It is now above the 40 week average, which puts it, if not in a bull market, at least at the end of a bear. Stochastics and MACD both have lots of room to move up, so there isn;t anything to stop the advance until it gets to 1370.

Crude oil has yet to break the 40 week, and may have some resistance there, but did get above an important pivot point at 90. The next level to watch is going to be about 105. With another FOMC decision, and the possibility of QE3, this is highly likely to test it, and if we do get QE3, break it.

 The correction in gold also appears to be over, but this is a long way from making a new high, and will need a big boost from the Fed to get there. This has not seriously challenged the 40 week line in almost 3 years, so the lesson here is, whenever it gets anywhere near it, buy.

The yield on the 10 year treasury, which has been interfered with unmercifully, is not going along with the recovery story. While it did get a pretty good bounce in the last month, this charts shows that, in comparison to the last 3 years, it was pretty weak. this is still barely above levels it was at during the panic of 2008.

The US dollar, on the other hand, did not move up much in the latest recession scare, and is now dropping like a rock again. This is good for stock prices (and prices of just about everything else priced in dollars), and if you don;t eat or use energy, you are in really good shape.

It appears the market is expecting something big from the Fed next week, and unlike last time, I don;t expect Bernanke to disappoint them. We are now close enough to next years election that juicing the markets now will have an effect, and Bernanke probably sees very little chance of keeping his job if a Republican becomes President. However, I really question just how much another round of QE can keep the markets going. But then again, I don't have a Ph.D.

I will have the new highs update shortly.

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