Archive for June, 2009

Sunday, June 28th, 2009

 

The markets should continue to lift into the 4th of July holiday.  Although the market is not coiling it will break to one direction or the other.  We should see that point of inflection between Wednesday and Thursday of this week.  There is a rather important downtrend line at 923-925.  Should we see the market close above that level we can see the market drift to the 952 level and then go to the 986 level.  Above that level, there is very little resistance to levels well over 1000 and even to 1100.  On the downside we have lots of support at the 884 levels and below.  The problems for the S&P 500 are found at 786 and lower, levels that would lead to a vacuous downside whoosh.

The volatility index is breaking down and has taken out the May 18, 2009 low of 26.57 closing the Friday session at 25.93.  Although the VIX is oversold, there is nothing on the chart to tell us that it won’t stay in that condition.  There should be support between 19 and 22 which tells us that the market can rally further.  Fear seems to be going away, well at least for the moment. 

We continue to see the “new” government here in the
USA try to impose restrictions on the financial markets.  These restrictions are causing the migration from our shores to other exchanges which are more cordial to IPO’s and other rules.  It would appear that our government has not yet understood that money will flow to where the atmosphere is friendlier therefore, not here. 

The US Dollar index has been under pressure since printing 81.795 on June 16th.  When we look at the chart, we notice that we are in a trading range of 1.25 or so.  We also noticed that that range has a downside bias.  There has been a lot of chatter about the US Dollar and its status as a reserve currency of late.  This could have been dispelled somewhat by the rather good auction of the seven year security last week, which found a great deal of foreign buyers.  Yet, we continue to hear rumblings from Asia regarding the
US status as the reserve currency. 

Tuesday:  June Chicago PMI is released at 9:45 and June consumer confidence is released at 10:00.  Wednesday:  May construction spending is released at 10:00, June Challenger, Gray & Christmas job cuts index is released at 7:30, and June ISM index is released at 10:00.  Thursday:  June nonfarm payrolls and unemployment are released at 8:30 and May factory orders are released at 10:00.  Friday:  US markets are closed.

The US Dollar index continued its downward slide in the Friday session.  The downtrend line is at 81.032 for the Monday session and 80.889 for the weekly chart.  The weekly chart tells us to be cautious on the US Dollar index.  Don’t forget the June 1, 2009 low of78.375.  Should we close, for more than one day, below that level, we certainly will open the door to 77.15, 76.025, 75.695, 74.833 and 73.365.  On the upside, should we close above the downtrend line we could easily trade up to 81.795.  Above that level, we will open the door to 83.335, 85.030, 86.230 and 87.220.  The 5-day moving average is at 80.598.  The top of the Bollinger band is at 81.800 and the lower edge is seen at 78.713.  All the indicators that we follow herein are pointing lower and not one of them is oversold so, we do have further room to the downside.  We are below the Ichimuko clouds for the daily and monthly time-frames and in the clouds for the weekly time-frame.

The S&P 500 left a small bodied doji-like candle on the chart as a result of the Friday trading session.  Although all the indicators continue to issue a buy signal, both our own indicator and the stochastic indicator appear to be curling over.   The 5-day moving average is at 901.450.  The top of the Bollinger band is at 959.152 and the lower edge is seen at 889.814.  We are above the Ichimuko clouds for the daily time-frame, but remain below the clouds for the weekly and the monthly time-frames.  So long as the market stays s above 884.25, we will lean towards the bullish bias.  Naturally, for the bulls we need to see a close above 923-925 to scare the bears into covering some of their positions.

The NASDAQ 100 closed above the 20 day moving average of 1468.47 and above the 5-day moving average of 1449.80.  This index closed up on the Friday session while the S&P 500 closed slightly lower for that same session.  The 5-day moving average is at 1449.80.   The top of the Bollinger band is at 1414.27 and the lower edge is seen at 1422.67.  All the indicators that we follow herein continue to issue a buy-signal with plenty of room to the upside.  So long as we do not close below 1412.00, we will side with the bulls.  We are above the Ichimuko clouds on the daily chart, in the clouds for the weekly chart and below the clouds for the monthly chart.  We have broken above the downtrend line and look as though we could continue higher.  When we look at the market profile chart we see that there are single prints on the weekly chart above 1489.75.  There seems to be a lot of thin air above this market with little to hold it down.  Again, that is the findings of the weekly market profile chart and not reflected on the candle chart which shows that above 1517.75 we will open the door to much higher levels.  Both charts illustrate that we could go higher.  

The Russell 2000 joined the NASDAQ 100 in rally mode in the Friday session.  Perhaps the rally in the Russell was due to the portfolio adjustments caused by the rebalancing of that index or perhaps it was following the NASDAQ’s lead.  This index, much like the NASDAQ 100 has little in the way of supply above 565.60.  The Russell 2000 has broken the downtrend line and, so long as we do not close below 485.10, we will side with the bulls.  The 5-day moving average is at 497.08.  The top of the Bollinger band is at 539.54 and the lower edge is seen at 487.65.   All the indicators that we follow herein continue to issue a buy-signal and have plenty of room to the upside.  We are above the Ichimuko clouds for the daily time-frame and below the clouds but touching the lower edge of the clouds for the weekly time-frame.   We do not have adequate data for the monthly charts for the futures.  If this index can close above 515.30, we will have opened the door to the recent June highs of 535 and 541. 

Although crude oil closed down on the day in the Friday session, we note that the market put in a higher low and a higher high on the day.  The 5-day moving average is at 68.96.  The top of the Bollinger bands is at 72.862 and the lower edge is seen at 66.071.   When looking at the chart we notice that the Bollinger bands are becoming very narrow and this action tells us that we should expect to see some volatility return to the crude oil market.  All the indicators that we follow herein are pointing lower.  The uptrend line on the daily chart is at 68.659.  We are above the Ichimuko clouds for the daily time-frame and the monthly time-frame and touching the clouds from below for the weekly time-frame.  So long as the market does not close below 66.37, we will give it to the bulls.  It is also important to remember that above 84.01 there are single and double prints on the market profile daily chart. 

Gold, like crude oil, made a higher high and a higher low in the Friday session.  Gold did close lower in that session.  The 5-day moving average is at 931.68.   The top of the Bollinger band is at 987.803 and the lower edge is seen at 910.388.  We are above the Ichimuko clouds for the daily, weekly and monthly time-frames.  The market profile daily chart tells us that above 988 and 991 that the bulls will take control of the market and likely push it to the highs seeking to make a new high.  We have a lot of support under this market.  We really need to see this market trade above 942.50 to open the door to the upside.