The markets are rising above moving averages. How long will it continue? A look at the markets by the numbers.
Dow Jones Industrial Average: Closed at 12623.998 +45.03 breaking out and above serious resistance through a top line channel and out of the interior of a triangle apex. Volume was 110% of normal and momentum was mildly higher. Price is far above all moving averages. Next upper resistance is 12750-13,000. The Dow is free of five key resistance points with nothing above price but clear air. More buying on Friday and Monday and some clear sailing after this breakout for most stocks and their indexes.
S&P 500 Index: Closed at 1314.50 +6.46 on 105% of volume and rising momentum. Price is still stuck inside its triangle but we can see the larger wave three up ready to give the S&P’s a buying boost. The price of 1315 is current resistance at close; and 1325 is the next higher number. Price is above moving averages and support is 1300. Erin Swenlin at DecisionPoint said today, “We finally saw a sustained breakout above 1300. The market opened higher after a positive housing report was released and kept on climbing as good news arrived out of Greece regarding a temporary settlement with private debtors.” She is correct but the news was all a fairy tale to pump markets; but it sure worked. On Friday-Monday expect more buying, from a triangle breakout with our next stop at 1325 and then 1350 resistance. Don’t trade against rising trends.
S&P 100 Index: Closed at 594.93 +2.41 with three closes above hard upper channel line resistance. Volume was +105% and momentum is up. With buying rising freely and no nearby resistance points, we can see the price going to 600 and 615 quite easily. Current resistance is mild at 595. Support is 585.00. I can see some profit-taking at the end of January with this rally continuing for nearly another month.
Nasdaq 100 Index: Closed at 2441.70 +15.74 on faster, rising momentum and 105% of normal volume. Not only did this index jump-up and through top channel and price resistance at 2400, but it had a big up-day Wednesday and then gapped up even higher on Thursday. We are on or near the highest highs for the year for this index. Support is 2525 to 2530 and resistance is 2500. Google stumbled but IBM and most of the other techies did quite well. Look for more buying on Friday and Monday of next week.
30-Year Bonds: Closed at 142.81 -0.34 and were topping and selling against hard, upper resistance at 145.00. Improvement in the Euro currency and Euro-bond news put a cap on the 30’s rise. Price still clings to the underside of the former bull supporting channel line. With stocks rising we can see the bond pattern going into a fade and sell. The Euro was back at 126.50 this past week and is now at 129.69. It is coming back up on being oversold. Close-by resistance is 143.00 and support is the 20-day at 142.76 and 142.11 on the 50-day. More selling pressure on Friday and Monday. In the middle of next week, bonds could be 140.00.
XAU: Closed at 188.04 -3.16 selling down toward 180.00 on our previous forecasts. Momentum was up but is turning flat to down. Price is under all moving averages. Next lower nearby support is 185 then down to 180 and maybe even 175.00. The metal to shares ratio, which is 90% correct in forecasting has turned down. Do not despair on precious metals their related shares. We should bottom out on normal technicals next week followed by new and lower basing support. Then, we see a new six week rally with at least a 25 point jump in the XAU. After a mid-March correction, an even larger and stronger spring rally extends into the first 10 days of April. This will be driven by and higher precious metals prices.
Gold: Closed at 1657.80 -2.90 on rising momentum and the price above all moving averages. January is usually a weaker or flat month for gold. However, pent-up demand from being oversold and the enormous amount of physical buying will firm this market. It provides a new floor for a major springboard rally toward $2,050 with a couple stops at 1708 and 1750-1923. Price of 2,000 is a major resistance point. However, with the strength we see in gold, we think an overshoot could be expected to 2,048.50 major resistance. Gold can go even higher this year but we see a top at the $1923-2050 trading range for the first and second quarters. If we touch $2,250-2,450 this year, it’s probably going to be this fall in the 4th quarter.
Silver: Closed at 30.62 +0.11 on rising momentum and a price above the 20-day average at 29.84. We have a great deal of resistance between the close and $34.48. There are probably at least 6-7 stop and go resistance points in that price range. This will slow silver to a crawl unless some real drama occurs in the news. Physical silver coin markets are setting new records. Foreign buyers especially in Asia and the Middle East are purchasing gold by the ton. Considering this, one would think the paper silver and gold should be fast track buyers. However, we must get past the settling-basing stage first. Have some patience and you will be rewarded. Expect a week of selling then we see the new rallies begin.
US Dollar: Closed at 80.10 -0.42 as the dollar peaked at 81.80 with new selling underway. The momentum pattern made a bear double top and turned down to sell. First lower support is 80.00, which is very firm. When that is broken, a next lower price of significance is 78.50 support. We also have a 50-day moving average at 79.51 providing hard support. Last year from an early January peak above 81.00, the dollar sold back to 72.50 support. While it could do that again we think the dollar stops selling in mid-March after the next major Euro-land meetings. That could be a sinker for the Euro causing the dollar to rebound. From this coming Friday to following Friday, I expect the dollar to trade between 80.00 and 78.50.
Crude Oil: Closed at 100.54 -0.41 with price in a trading channel between 98.50 and 102.50. Momentum is weaker and turning down like gold. Price remains above all the moving averages offering good support and a more bullish pattern. It is possible for oil to trade in chop for about one more month before moving-up faster in a strong spring rally. Before we really get moving up here, I think the price can sink back to $95-$96 first; then we begin a stronger move from $95 to $120-$125 by the end of April. Gasoline will be over $4 on refinery closings and inflation. Natural gas is bottoming at $2.20 to $2.40. These lows would then be followed by a mild rally on heavy, over-done natural gas reserves. Nat gas is smothering green energy.
CRB: Closed at 311.96 +1.45 on toppy and flattening momentum. Price is trading in a choppy channel at 308 to 312. Resistance is the 200-day average at 319.99; say 320.00. Support is 310. We are sideways to lower through the end of January followed by three months of rallies. -Traderrog
