|
Financial Sense Home l Market Monitor l Market WrapUp l Storm Watch l About Us l Contact Us |
||||
"Charts Don't Lie. They Tell The Story."
We can make the same comment for both the Dow and the SP in examining their respective monthly charts. The markets have spent the last 11 months (starting in October of 2002) just rallying up to massive overhead resistance. During that time, the rally has consumed close to 650 billion according to the estimates of Aegean Capital Group, Inc. One has to wonder, if it took already 11 months of rallying and 650 billion just to get to resistance, where is the additional fuel going to come from to propel the market above resistance? The long-term charts, suggest that maybe it was too early for the bulls to have opened the expensive champagne bottle. The bulls have won one major battle, but the charts are telling us that the war is not over yet.
Those who have been long can use the 9300 level as the line in the sand. A weekly close below 9300 would serve as a warning shot over the bow of the ship carrying the bulls that the good times may be coming to an end and they should be keeping a life jacket near by just in case they may have to jump ship in a hurry!
On a daily basis, a close below 9380 on heavy volume will be a signal that the bears have wrestled control of the market away from the bulls.
We can make the same comment for both the Dow and the SP in examining their respective monthly charts. The markets have spent the last 11 months (starting in October of 2002) just rallying up to massive overhead resistance. During that time, the rally has consumed close to 650 billion -according to the estimates of Aegean Capital Group, Inc.- One has to wonder, if it took already 11 months of rallying, and 650 billion just to get to resistance, where is the additional fuel is going to come from, to propel the market above resistance? The long term charts, suggest that maybe it was too early for the bulls to have opened the expensive champagne bottle. The bulls have won one major battle, but the charts are telling us that the war is not over yet.
Those who have been looking for an opportunity to go short on an intermediate term basis, initial positions of 10%-15% can be taken in the 1035-1045 zone, to be followed by another 25%-30% in the 1065-1075 zone, to be followed by another 35%-45% in the 1120-1140 zone. As it stands right now, the SP on a weekly basis, has already reached major resistance and unless the bulls can find a way to overcome this resistance, we ought to expect a pullback.
On a daily basis, a close below 1005 on heavy volume will be a signal that the bears have wrestled control of the market away from the bulls.
Eleven months of rallying, eight consecutive months of higher monthly closes, a few hundred billion in net inflows, and yet this index has not even reached long-term resistance! Charts do not lie!
On a weekly basis, the 1400 level appears to be formidable resistance, notice that channel support is in the 1275-1250 zone. That happens to be about 150 points below current levels, which suggests a possible 10% decline from current levels.
This index finished the day at channel support with a big gap right above it, which means there is a high likelihood that we'll see a bounce off of support that will close the gap.
The long-term upside target for the HUI is in the 250-255 zone, which is about 20% higher from current levels. Given that we expect a decline in the U.S. dollar of similar magnitude, this target makes a whole lot of sense to us.
Over the next week or so, the HUI will encounter resistance in the 215-217 zone. A pullback to the 200 area can be expected, but in our view it should be used as an opportunity to add to long positions for a run to the 250 level.
It broke above resistance at 205 and now we should expect further advance to the top of the channel in the 215-217 zone.
|
||||
|
Home l Broadcast l Market Monitor l Storm Watch l Sitemap l About Us l Contact Us |
