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WEEKLY CHARTS

DJIA: Weekly support at 11400, 11280, and 11000. Resistance at 11670 and 11750.

DJTI: Weekly support at 4200. Resistance at 4500.

SP500: Weekly support at 1295 and 1260. Resistance at 1326 and 1335.

NASDAQ: Weekly resistance at 2250 and 2360. Support at 2200 and 2150.

HUI: Weekly support at 275 and 250. Resistance at 305 and 320.

OIL: Weekly resistance at $65. Support at $60.50 and $55.00.

The TOs are declining, which means any bounce won't get very far. In fact, the triple negative divergence implies that the upside potential is limited to 1.5%-2.0%.

The trend is UP for NASDAQ.

 
The trend is UP for the SP.

SUMMARY

Last week's price action was quite important because it gave us plenty of information with regard to the "set-up" going into this week. Knowing the "set-up" allows us to determine--at least for the short-term--whether the underlying trend remains intact, or if there has been a change under the surface. So, let's examine the "set-up" at hand--as we see it.

First of all, the chart pattern of the SP/Dow/NASDAQ is the type that three out of five times results in one more marginal new high. Second, if you look at the table below, you'll notice that price is very close to support for all the major indices. At the same time--as we already pointed out--most indicators are near their respective support levels as well. In other words, the chart pattern, the price level, and the technical indicators all suggest that coming into this week we had a "bullish set-up" and thus, it is perfectly justifiable that the major indices reversed to the upside. Moreover, they should be able to rally further and make marginal new highs. (Please also read "The 4 year cycle is a function of liquidity.")

XAU COMMENT: The current price pattern can evolve into a triple bottom or into a bearish continuation flag. Either ought to result in a 20-25 point movement in the index. If the XAU closes above 130, and then pulls back but stays above 125, then the odds would be better than even that the price pattern has evolved into a triple bottom. On the other hand, if the XAU closes below 119 anytime during the next 5 trading days, then the odds would be better than even that the price pattern has evolved into a bearish continuation flag.

Ike Iossif

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