By Gareth Soloway on August 16th, 2010 12:08pm Eastern Time
The markets gapped lower today with the SPDR S&P 500 ETF (NYSE:SPY) gapping to the double bottom from last Thursdays open at $109.60. After flushing for the first few minutes of the day, the markets recovered and moved sharply higher to the flat line. They are holding there now, trading in a tight range just like a normal Monday in August.
The gap down occurred after GDP numbers from Japan were quite a bit lower than expected overnight. In addition, the U.S. Manufacturing Index in August just rose slightly and housing data continues to be ugly. Continued weak economic news has kept this market under pressure for the last week on fears of a double dip. The gap down came and the first candle of the day was a beautiful bottoming tail. In addition, the first candle of the day traded well below the double bottom from last Thursday intra candle but by the close of the 10 minute candle, it had recaptured it. These two signals are bullish. Add in volume and a dropping dollar and the markets were destined to rise back to the flat line, if not turn positive by the end of the day.
The dollar ETF PowerShares DB US Dollar Index Bullish (NYSE:UUP) gapped lower and continued to fall for most of the morning session. A dropping dollar helps the markets stay afloat and did so today.
Gold again was on the move higher with the gold ETF SPDR Gold Trust (NYSE:GLD) up by 0.68%. Gold continues to be a having for uncertainty. Anytime fear jumps up, economic data looks weak, gold is the place people run. To get more information, analysis, guidance and swing trades, join the Research Center.
Gareth Soloway
Chief Market Strategist
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GOLD SEASONALS of the last 8 years indicate Q4 is the best quarter, showing % gains in 7 out of the last 8 years , followed by Q3 and Q1 rising in 6 of the last 8 years. The current gold rally COULD BE ESPECIALLY POWERFUL as it combines the onset of further treasuries purchases by the Fed and broadening questions about Eurozone debt, this time from Ireland. The Irish-German 10 year yield spread is testing the 4.0% territory, which is 20-bps away from the all time high reached in June 2009. Watch Gold in EUR terms and a close above EUR 960/oz. GOLD/USD HAS NOW BROKEN ABOVE its 55, 100 and 200-day MAs FOR THE FIRST TIME since April (when Eurzone debt crisis erupted and fed a 15% rally in gold). $1,270-80 is seen before end of Q4.
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By InTheMoneyStocks.com on August 15th, 2010 6:20pm Eastern Time
The S&P 500 Index, SPDR S&P 500 ETF (NYSE:SPY) declined sharply by over 42.00 points this past week to close at $1079.25. Next Friday August 20th is options expiration and often during the week leading up to expiration the markets will be very volatile. This is a week during the month that the institutional money that moves markets try to shake out the small retail options trader. Please be aware, very few options get exercised and often settle or closed out long before the Friday expiration. Therefore, look for the coming week to be choppy and volatile. This week could be trend-less, however, the short term trend is now looking down again after staging a sharp 10.0 percent rally from early July. The weekly support area for the S&P 500 Index is around the 1040 level.
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CHF/JPY Bullish Outside Bar on the daily, at 50% fib level, and 80 is a key level way back in 2003 - not sure it's a key level now? But anyway, there's lots of traffic above 82, and if price goes north then price could get messy. Also don't ignore the weekly downtrend, although the weekly bar made a pin. We shall see what unfolds.
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Key 82 level was broken last week, but there's potentially a lot of support in this area, or at least there's a bit of traffic on the weekly. Not sure if price is forming a channel or wedge on the daily, but downward price movements seem to be capped by the shallow black lower TL for now. Lets see what unfolds.Intraday reversal on Friday, may suggest more upside in the short term?My other opinion is that the daily has made a large descending triangle, which is bearish. If it's true, then price goes south in a big way.Anyway, I speculate as ever, because no pattern is full proof or lasts forever, patterns often morph from one to another. But looking for Pin Bars and other good price action signal really helps tell you which way to go, which makes life much simpler.
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This bullish falling wedge pattern is working out ok so far. Happily I managed to catch a little bit of the move on Friday :) 86.35 is res for now, and 85.30-85.50 could be a nice buy zone if PA agrees. If 86.35 breaks it gives way 86.80/87. Fancy longs myself, but only if the right bars form. Pins or Bullish Outisde Bars (BUOB).
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