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Weekend Market Analysis 29 July 2018

Jul 28th, 2018 No comments

Executive summary

World equity markets continued up this week, with the Dow Jones reaching an interim high at 25587.20 on Thursday but dropping 136 points to close the week at 25 451.06. This is another example illustrating that markets are not driven by good news but rather by liquidity. The net effect of the US / EU trade pact and the US GDP growth of 4.1% was a drop in prices as the US 10 year treasury yield continued to rise this week to close at 2.96%, with yield (interest rates) continuing to edge up and reduce market liquidity. Elliott Wave structure continues to indicate the market top with the Nasdaq now joining the Dow and S+P500 in having topped out. So, the potential for reversal patterns to develop is now increased as we slowly begin to move through the powerful ‘tipping point’ moment.

The US$ closed slightly up at $94.46 and is likely to still move higher before a major drop in value. This will be a precursor to eventual strength again, and is likely to result in strong precious metal gains in the short term after some dithering. Gold is likely to bottom soon after closing at $1223 on Friday and, with sentiment at extreme pessimistic levels, is likely to rally strongly (with silver) in the next period up to major resistance at $1375 (at the neckline of the 5 year long basing pattern). The period beyond is likely to see strong dollar gains and gold weakness, although the timelines are difficult to forecast accurately.

 

US$

The US$ short term chart structure indicates the consolidation below the peak is still likely to rally through resistance to a level marginally above the peak. The support region between $93.80 and $93.45 is not likely to be tested until after the rally which could exceed the previous peak at $95.652.

The oscillators are moving sideways in anticipation.

 

 

 

The longer term 12 month chart illustrates the period of dollar weakness after the short term rally. There are 2 support zones which will be tested in a likely decline towards $91.00.

The oscillators are turning up in support of the short term dollar rally.

 

 

 

The yet longer term 3 year chart illustrates the decline towards a target zone in line with the Sep 2017 low at about $91.00. The decline will break out from a bear flag formation and form the first leg of the 2nd shoulder of what could develop into an inverted H&S formation.

The oscillators are holding up in preparation for the decline.

 

 

 

Japanese Yen

The US$/Yen weakened into a small consolidation between 10- and 50-Dema which is likely to reverse up towards resistance in line with the short term dollar rally. However, during the dollar decline after that the Yen will increase and strongly test support (red) during a period of strength in precious metals as well.

The oscillators are dropping and are likely to bottom as the dollar rally begins.

 

 

 

US Treasuries

The benchmark US Treasury 10 year yield is at a ‘tipping point’ to either end the bond countertrend rally (red arrow) or continue with the main yield increase trend (blue arrow). The next week or two will decide which of the two trends will continue. The blue arrow seems to be the more likely as the bond market rally has been losing momentum, and is more likely to start collapsing again, especially if the equity market has also ended its countertrend rally.

The horizontal blue and red lines need to be penetrated to finally determine direction.

 

 

 

Gold

The gold market is exceptionally weak with 40 consecutive closes below 10-Dema, confirming extreme investor pessimism. A consolidation has developed since the 6 month cycle low which has confirmed a bottom. There should now be a strong gold rally with the US$ chart structure indicating a period of weakness soon.

Both oscillators are turning up in support of a gold rally.

 

 

The longer term 3 year chart illustrates the extreme investor pessimism with the third straight weekly fall to a new low. A gold rally is very likely as a rebound from this situation, plus the likely decline in dollar value soon.

The Slow Stochastic oscillator is bottoming and starting to turn up in support.

 

 

 

HUI / Gold Ratio

The HUI / Gold ratio has dropped sharply from the 0.1406 level indicating the increased underperformance of US miners against gold: A markedly lower gold price to boot. This is bearish, but the extent of the weakness in the whole complex is it’s strength in that a rebound is likely together with the promising chart structure of the US$.

 

 

 

GDX US miners ETF

The GDX chart delivers the same message of extreme investor pessimism. The resistance and support levels have dropped to new lows, and the only optimistic element is that the oscillators are bottoming.

 

 

 

The longer term 3 year GDX chart illustrates the range-bound nature of the data, but also how the chart is moving down towards support. This is likely to support a rebound, as it has done on previous ocassions.

 

 

DUST US Gold Miners Bear Index

The DUST chart exhibits the reciprocal situation and, accordingly, has broken up to higher levels, with resistance and support now also at higher levels. But the oscillators are topping out which could result in Dust reversing down soon.

 

 

 

Silver

Silver is exceptionally weak with 30 consecutive closes below 10-Dema, confirming extreme investor pessimism. A consolidation has developed since the 6 month cycle low which has confirmed a bottom. There should now be a strong silver rally with the US$ chart structure indicating a period of weakness soon. The key breakout level for silver is $15.70.

Both oscillators are turning up in support of a silver rally. Hopefully, the silver rally is more vigorous than gold to continue reducing the Gold / Silver ratio.

 

 

 

The longer term 3 year chart illustrates the extreme investor pessimism with the seventh straight weekly fall to a new low. A silver rally is very likely as a rebound from this situation, plus the likely decline in dollar value soon.

The Slow Stochastic is bottoming in support but the MACD has broken down through the bottom trendline.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) exhibits a strong negative bias in dropping through support to a new confirmed bottom at 7.60. A small consolidation has occurred with a key breakout level at 8.25. There should be a strong rally from here and the oscillators have bottomed in support.

 

 

 

Gold : Silver Ratio

The reducing trend continues to be threatened but the ratio actually declined this week to close at 78.94. The oscillators are rising due to the declining prices, but the next period should be more positive. The ratio is still below 80 and may well decline further in the next period.

 

 

 

General Equities

The Dow peaked at 25 587 this week but closed down 136 points from that level. The drop on Friday closed a gap created in the climb to the peak. Although the US market shows strong signs of exhaustion the bear flag still needs to be broken. There may be further small increases next week but most indicators point to the end of the countertrend rally which started on 2nd April 2018.

The next significant leg down should be a prolonged  and severe drop.

 

 

 

Another look at the New Highs – New Lows on the New York Stock Exchange continues to illustrate the energy in the bull market leading up to the Jan 2018 peak and the lethargy and lower energy levels of the countertrend rally in the bear market. The chart below highlights the 6 months leading up to the Jan 2018 peak and the 6 months thereafter.

During the bull market phase New Highs outstripped New Lows by about 200, whereas during the countertrend rally from Apr to now they were equal at about 0. In other words, the bull market was powerful with high energy levels whilst the bear market rally is lethargic low in energy. The difference in levels between blue and red is distinct and clear.

The index closed at 31 on Friday.

 

 

The Dow Jones chart structure continues to maintain its bear market mode despite the 4 month countertrend rally. A clear and powerful double top is visible and the bear flag is about to be penetrated on the downside.

Once the next wave down starts on the Dow it will quickly test previous lows indicated on the chart in red. The oscillators are peaking in support of the next wave down.

 

 

 

 

Categories: Currency, Equity, Gold Tags:

Weekend Market Analysis 22 July 2018

Jul 21st, 2018 No comments

Executive summary

Equity markets were mixed this week, but world markets continue to look threatening. The US Dow Jones is in exhaustion mode very close to the start of a major leg down in the bear market, and the powerful ‘tipping point’ moment remains in place as does the potential for reversal patterns to develop. Even the US bond market is showing signs of nearing the end of the countertrend rally as it continues to lose momentum, with the 10 year yield rising to close at 2.89% (much to do with Russia selling US treasuries). The US$ closed down at $94.23 but is likely to still move higher before a major drop in value. This will be a precursor to eventual strength again, and is likely to result in strong precious metal gains in the short term. Gold bottomed on Friday to close at $1231.10 and could now enjoy a rally that will see gains in the next period up to major resistance at $1375, being the neckline of the 5 year long basing pattern. There are a plethora of reversal candles on the various charts to support a precious metals rally from this point. The period beyond is likely to see strong dollar gains and gold weakness although the timelines for this are difficult to forecast.

 

US$

The US$ is turning down from a strong top consolidation with the support of a number of Shooting Star reversal candles. Below the previous lows the support zone extends from $92.80 down to $92.10 with a clear run below that to below $90.

The oscillators are turning down in support of further dollar weakness.

 

 

 

The longer term 12 month chart illustrates the bearish double top with a prominent Shooting Star reversal candle at the peak. There are 2 support zones below the top consolidation which all indicates potential for further dollar weakness, although slight firming is likely before this.

The oscillators are turning down in support of further dollar weakness.

 

 

 

Japanese Yen

The US$/Yen weakened abruptly as the Yen strengthened down from resistance, and this also reflected the recent gold strength. The Yen is likely to strengthen further as the dollar weakens, and this is supported by the oscillators turning down.

 

 

 

US Treasuries

The benchmark US Treasury 10 year yield increased this week to close at 2.89% as US treasuries begin to show signs of losing momentum, although technically still in a countertrend correction. This is due apparently to increased Russian sales of US treasuries. If this increasing yield trend continues it could be signalling the main trend collapse in the US bond market could well be underway again: The trigger would be when the 10 year yield edges above 3.1% as indicated by the blue line on the chart.

 

 

Gold

Gold has dropped below the previous 6 month low to close at $1231.10 on a strong Engulfing reversal candle. It is now in a position to rally strongly to test long term resistance, especially with the indicated next phase of potential dollar weakness.

Both oscillators are turning up in support of a gold rally.

 

 

 

The longer term 3 year chart indicates the lower 6 month cycle low, but with a Hammer reversal candle which is likely to start a gold rally. This rally could test main resistance with the US$ weakness potential.

The Slow Stochastic oscillator is bottoming and starting to turn up in support.

 

 

 

The yet longer term massive pentagon base pattern has been penetrated on the downside in closing at $1231.10. But, in spite of this the aforementioned triggers could see gold rally to test the neckline at $1375.

 

 

 

HUI / Gold Ratio

Although the HUI / Gold ratio has broken back below the 0.1406 level it is nevertheless trending positively between the blue and red diagonals and in fact closed at 0.1397 which is nudging 0.1406. This indicates US miners are increasingly moving towards outperforming gold itself. The oscillators are dropping which suggests that with the potential gold rally US miners will have to increasingly outperform in order to maintain the positive bias. If that happens then gold shares will ratchet up accordingly.

 

 

 

GDX US miners ETF

GDX has dropped below previous lows but reversed off its low on a Shooting Star reversal candle to confirm a bottom. This should now spark a rally which will see an improvement in US miners to test resistances. The Slow Stochastic is turning up which will support a GDX rally.

 

 

 

DUST US Gold Miners Bear Index

The DUST chart exhibits the reciprocal situation and, accordingly, has broken up through the triangle. But it reversed down before the close on a Hanging Man reversal candle confirming the top. This supports a rally in GDX and the Slow Stochastic is turning down in support of this proposition.

 

 

 

Silver

Silver has broken down severely to reverse off a confirmed bottom to close at $15.55. This presupposes a potential rally which, like gold, should test resistances. The Slow Stochastic is turning up in support of this. Hopefully, the silver rally is more vigorous than gold to continue reducing the Gold / Silver ratio.

 

 

 

The longer term 3 year chart indicates exactly the same proposition as the short term chart. The 6 month cycle low is likewise likely to propel silver up with the assistance of a Hammer reversal candle which cshould see resistances tested. The oscillators are bottoming in support.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) exhibits a strong negative bias in dropping through support to a new confirmed low on a Shooting Star candle. This should see a strong rally with the oscillators also turning up.

 

 

 

Gold : Silver Ratio

The reducing trend has been penetrated and this is also threatening to penetrate back into the upward sloping wedge pattern. However, the ratio is still below 80 in closing at 79.18, and with the precious metals rally potential this is likely to be prevented.

The oscillators are turning up which is negative for precious metals, and the ratio.

 

 

 

General Equities

The short term chart of the Dow Jones illustrates the ‘bear flag’ has now been penetrated on the downside, as the Dow reacts to signs of exhaustion. All the gaps have been filled.

The Dow Jones is now very close to the start of the next leg down in the bear market.

 

 

 

The Dow Jones chart structure continues to maintain its bear market mode despite mild recent strength. A clear and powerful double top is visible and the bear flag has been penetrated on the downside. The countertrend rally on the New York stock exchange has completed its 13th week and is either complete or will be any time soon. Serious declines will follow as the slowly evolving bear market continues to unfold worldwide.

Once the next wave down starts on the Dow it will quickly test previous lows indicated on the chart in red. The oscillators are turning down in support of the next wave down.

 

 

 

 

Categories: Currency, Equity, Gold Tags:

Weekend Market Analysis 15 July 2018

Jul 15th, 2018 No comments

Executive summary

 Equity markets were up this week, but world markets do not look good with the countertrend rally in the Dow Jones very close to an end now. The powerful ‘tipping point’ moment remains in place as does the potential for reversal patterns to develop. This situation can of course persist for a while longer with, for instance, strong indecision in the direction of the US$ and the continued countertrend rally in the US bond market. The US$ index strengthened slightly to close at $94.50 and continues to build a stronger top pattern in the process, which indicates weakness next. Gold on the other hand closed weaker at $1241.20 having reversed off the primary trend line from the low point at Dec 2015, which indicates a rally next. US bonds continued to move sideways with the 10 year yield at 2.83% which looks more likely to drop further before increasing into the main trend with lower bond prices.

As long as indecision in dollar value persists so too will indecision persist elsewhere, especially in precious metals. But gold has had a pronounced weaker bias recently in dropping down to a region of reasonably strong support which could trigger the somewhat delayed rally. The 5 year long gold basing pattern is still only just intact and whilst the long term prospect for gold is very strong, the medium term prospect is not.

 

US$

The US$ is consolidating below the peak and double top. In rising back up this week it turned down at resistance to close at $94.50 on a Star reversal candle. There is some indecision as the dollar continues to develop the top pattern which is now close to 2 months duration. Below the previous lows the support zone extends from $92.80 down to $92.10 with a clear run below that to below $90. The pattern needs to develop further before a more accurate estimate of direction is possible.

The oscillators are mixed with the Stochastic rising and the MACD moving down in support of the indecision.

 

 

 

The longer term 12 month chart illustrates the bearish double top with the dollar building the top pattern below the peak at $95.529. There are 2 support zones below (red) and the period of indecision will need to resolve before penetration either up or down.

The oscillators are mixed suggesting additional time before chart resolution and structure provides more clues as to dollar movements beyond that.

 

 

 

Japanese Yen

The US$/Yen has severely punctured up through resistance as the Yen weakened against the dollar, reflecting also the weaker gold price. The oscillators are turning down which could indicate short term Yen strength and potential strengthening in the gold price.

 

 

 

US Treasuries

The benchmark US Treasury 10 year yield continues to move sideways to down to close at 2.83% with the countertrend correction still in progress. This is likely to persist for a while longer and the red support horizontal lines could be penetrated before the main trend resumes towards higher yields once again.

 

 

 

Gold

Gold has dropped to the Dec 2017 level again to create a mini double bottom as well as a major double bottom. This new bottom at $1241.20 still needs to be confirmed as the price may go lower next week. This is all in accord with the stronger dollar and weaker Yen, and as long as the indecision in dollar value continues so too will a weaker gold price persist. But the chart structures do indicate potential reversals, and with the extremely depressed precious metal sentiment at the moment, a rally off the double bottom level is certainly possible.

Both oscillators are bottoming which supports a gold rally.

 

 

The longer term 3 year chart indicates exactly the same proposition as the short term chart. The 6 month cycle low is likewise likely to propel gold up from the double bottom and the price has reached the main support trendline from the Dec 2015 low.

The Slow Stochastic oscillator is bottoming and is oversold.

 

 

 

The yet longer term massive pentagon base pattern is still only just intact with price closing at the bottom extremity of the pattern. There is some support at this level and with similar strong oscillator support it should rally from here. However, if it breaks down below this level it could have dire consequences for the next period.

 

 

 

HUI / Gold Ratio

The HUI / Gold ratio has broken back below the 0.1406 level to void the erstwhile breakout, as US miners underperformed gold this week. Diagonal support (red) is still intact but the oscillators are dropping which indicates further downside.

 

 

 

GDX US miners ETF

GDX has also broken back to void last week’s 2 breakouts, as the US miners rally reversed. Diagonal support is holding but the oscillators are dropping which indicates further downside to test support (red).

 

 

 

GDX therefore continues to be range-bound and until there is a meaningful breakout, either up or down, this will continue.

 

DUST US Gold Miners Bear Index

The DUST chart exhibits the reciprocal situation and, accordingly, has broken back into the triangle to void last week’s breakout. This supports lower gold and miner prices, and the oscillators are rising accordingly.

 

 

 

Silver

Silver has broken down through support to close at $15.81, just inside the support zone. Like gold, the chart illustrates the powerful double bottom in exactly reverse mode to the double top in the US$ chart. This could also be the start of a silver rally with the oscillators bottoming in support.

 

 

 

The longer term 3 year chart indicates exactly the same proposition as the short term chart. The 6 month cycle low is likewise likely to propel silver up from the double bottom to start testing main resistance, despite dropping to this low point. The oscillators are bottoming in support.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) exhibits a strong negative bias in dropping through support to a new low (still to be confirmed). However, the oscillators are bottoming and are oversold and the chart appears to be ready to propel upwards which will support increased silver prices.

So, it is a very negative-looking chart that is actually very positive for silver.

 

 

 

Gold : Silver Ratio

The reducing trend in the chart is being threatened with a breakback to test the breakout (blue), and the rise in the ratio penetrating the reducing trendline (black). The ratio is still below 80 closing at 78.48 and the reducing nature of the chart is still only just being maintained.

The oscillators are turning up which is negative for precious metals.

 

 

 

General Equities

The short term chart of the Dow Jones illustrates the ‘bear flag’ which developed in the last 3 weeks. It has successfully covered 2 gaps which needed to be filled and is now rapidly nearing the end of the countertrend rally of the past 12 weeks. There is still a remaining very small gap which may need to be covered and to complete this the Dow may still need to increase another 100 points.

In other words the Dow Jones is very close to the start of the next leg down in the bear market.

 

 

 

An added interesting aspect to Dow performance is to analyse the New Highs – New Lows on the New York Stock Exchange. The chart below highlights the 6 months leading up to the Jan 2018 peak and the 6 months thereafter.

During the bull market phase New Highs outstripped New Lows by about 200, whereas during the countertrend rally from Apr to now they were equal at about 0. In other words, the bull market was powerful with high energy levels whilst the bear market rally is lethargic low in energy. The difference in levels between blue and red is distinct and clear.

 

 

 

The Dow Jones chart structure continues to maintain its bear market mode despite mild recent strength. A clear and powerful double top is visible and the development of the bear flag is clear and distinct. The countertrend rally on the New York stock exchange has completed its 12th week and is either complete or will be any time soon. Serious declines will follow as the slowly evolving bear market continues to unfold worldwide.

Once the next wave down starts on the Dow it will quickly test previous lows indicated on the chart in red. The oscillators are topping out as the next downturn approaches.

 

 

 

 

Categories: Currency, Equity, Gold Tags:

Weekend Market Analysis 8 July 2018

Jul 7th, 2018 No comments

Executive summary

Equity markets were up this week, with the odd exception, but the world remains at a powerful ‘tipping point’ stage. Continued extremes in sentiment remain which have nevertheless started, ever so slightly, to develop reversal patterns in reduced US$ value, increased precious metals, and the continued potential for collapse in the equity and bond markets. The US jobs report on Friday moved equities higher, reduced US$ value, and nudged US treasuries up (with the 10 year yield dropping to 2.82%) as investors digested a mixed jobs report and the impact of an escalating trade war with China. Gold remains technically oversold and continues to develop into a more positive phase.

The US$ moved down sharply on Friday to close at $93.77 as it moves into a weaker phase after its recent peak, and Gold is moving up to close at $1255.80 after what is surely its 6 month cycle low below $1240. The next phase should see gold move up to test the neckline of the 5 year basing pattern at $1370, but the big news is that US gold miners have been outperforming gold itself and this week saw the HUI:Gold ratio break up which is very positive.

 

US$

The US$ has turned down from a double top (or even a triple top) to close below its previous low at $93.77. It has moved into a weaker phase and, although there is some doubt as to the extent of the drop, the chart pattern indicates short term support (red) between $92.80 and $92 10. The pattern needs to develop further before a more accurate estimate is possible.

The oscillators are dropping in support of further dollar weakness.

 

 

 

The longer term 12 month chart indicates support (red) lower down between $92.45 and $91.45, but with a stronger and yet more prominent double top at the resistance level it is likely dollar value will penetrate this support zone.

The moving averages are not providing support and the oscillators are suggesting further declines until chart resolution and structure provides more clues as to dollar movements beyond that.

 

 

 

Japanese Yen

The US$/Yen has dropped just below resistance as it continues to track 10-Dema approximately. With potential short term dollar weakness, the chart is about to drop down into Yen strength which is also supported by the oscillators. This would be added impetus for short term gold strength.

 

 

 

US Treasuries

The benchmark US Treasury 10 year yield continues to move sideways to down to close at 2.82% with the countertrend correction still in progress. This is likely to persist for a while longer and the red support horizontal lines could be penetrated before the main trend resumes towards higher yields once again.

 

 

 

US Treasuries and Gold

The relationship between gold and the US Treasury 10 year price is reflected in the chart below with rising bias in strong gold / weak bond price, and reducing bias in weak gold / strong bond price. The chart is bullish but continues to stall in the tail until a stronger gold price and weaker bond market completes the right shoulder in the H&S pattern.

Gold is likely to start strengthening now although the 10 year bond price is not likely to start weakening just yet: Hence the continued stalling in the chart tail. However, the Slow Stochastic is heavily oversold indicating an upward reversal is likely soon.

 

 

 

Gold

Gold has strengthened after dropping down to its 6 month cycle low at $1240 and the chart illustrates the powerful double bottom in exactly reverse mode to the double top in the US$ chart. This is now likely to be the start of a strong gold rally which is also likely to test long term resistance at $1370.

The oscillators have bottomed are in support of the gold rally.

 

 

 

The longer term 3 year chart indicates exactly the same proposition as the short term chart. The 6 month cycle low is likewise likely to propel gold to test main resistance at $1370 with the oscillators in support.

This particular cycle has the added impetus of a strong double bottom base.

 

 

 

HUI / Gold Ratio

One of the reasons for gold price sluggishness has been the absence of gold miner price energy, and as gold miners tend to lead gold itself the recent gold miner outperformance is likely to energize gold price increases. This week the HUI / Gold ratio has broken up through resistance which suggests a strong gold rally is now likely to start. The key level of 0.1406 has been penetrated with the oscillators moving up powerfully.

 

 

 

GDX US miners ETF

GDX is also exhibiting 2 breakouts, both diagonal and horizontal, in breaking up through the top slope of the triangle. This illustrates increased traction in US miner price increases which bodes well for increases in the gold price itself. The oscillators indicate further price increases.

 

 

 

The longer term GDX chart continues to illustrate the range-bound nature of the chart structure, and although there is short term improvement this still needs to translate into longer term improvement. The volume indicator at the bottom illustrates how volumes have dwindled together with investor pessimism, and not yet increased.

 

 

 

DUST US Gold Miners Bear Index

The DUST chart has broken down through the bottom line of the triangle which supports higher gold and miner prices. The oscillators are dropping in support, but the Slow Stochastic may be oversold.

 

 

Silver

Silver, like gold, has strengthened after dropping down to its 6 month cycle low at $15.80 and, like gold, the chart illustrates the powerful double bottom in exactly reverse mode to the double top in the US$ chart. This is now likely to be the start of a strong silver rally which is also likely to outperform gold and test long term resistance at $21 and beyond.

The oscillators are turning up in support.

 

 

 

The longer term 3 year chart indicates exactly the same proposition as the short term chart. The 6 month cycle low is likewise likely to propel silver to test main resistance at $21 and beyond.

This particular cycle, like gold, has the added impetus of a strong double bottom base.

 

 

 

USLV US Silver Miners Bull Index

The US silver miners USLV (bull index) has also bottomed although it still illustrates a strong negative bias, with 15 consecutive closes below 10-Dema. To confirm a bottom it needs to at least close above 10-Dema. However, the oscillators have bottomed and are oversold and the chart appears to be ready to propel upwards which will support increased silver prices.

So, it is a very negative-looking chart that is actually very positive for silver.

 

 

 

Gold : Silver Ratio

The ratio has broken clearly through the bottom of the 2 year pattern (red) although it exhibits a slight reversal (black) in the tail. It still maintains a positive downward sloping bias which augurs well for the next period, especially with potential dollar weakness and precious metal strength. The oscillators are also dropping which is all positive.

 

 

General Equities

The Dow Jones chart structure continues to maintain its bear market mode despite mild recent strength. A clear and powerful double top is visible and the recent strength in the last 9 trading days is a potential bear flag. Extremes in sentiment continue, and measures of investor optimism remain at elevated levels with most completely unaware of the impending threat. The countertrend rally on the New York stock exchange has completed its 11th week and is either complete or will be any time soon. Serious declines will follow as the slowly evolving bear market continues to unfold worldwide.

Once the next wave down starts on the Dow it will quickly test previous lows indicated on the chart in red. On a positive note it appears the oscillators are oversold which may extend the bear flag.

 

 

 

 

Categories: Currency, Equity, Gold Tags: