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USA
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gold
The S&P 500 briefly penetrated the
new support level at 1295 before recovering. A false downward
break would normally be seen as a bullish sign, but the
intervening rallies are weak, placing doubt over the strength
of short-term support. Expect the index to test intermediate
support at 1270, while a close above 1310, though unlikely at
this stage, would signal resumption of the primary
up-trend.
The first quarter has ended and we need to be
on the alert for a secondary correction -- as institutional
positions taken to support prices prior to the quarter end are
unwound.
Medium Term: The linear regression channel on the
chart below depicts the pace of the up-trend in recent years
(new drawing tools will be released with the beta version in
early April). The index is advancing in a slow up-trend,
frequently retracing to test previous support levels. A close
below the central linear regression line would signal a test
of support at the lower channel line. Twiggs
Money Flow closed below zero, warning of
distribution. Long Term: The index is in a slow
up-trend, with primary support at 1180.
The Dow Industrial Average retraced to test
support at 11150, but the short pull-back at [3] signaled
weakness and was followed by a bearish close below support at
[5]. Expect a test of support at 10950. Medium
Term: Twiggs
Money Flow (21-day) has turned below zero, warning of
distribution. A close below 10950 would warn of a secondary
correction, testing support at 10000. Long Term:
If the index respects support at 10950, the primary up-trend
is confirmed.
The Dow Jones Transportation Average and lead
indicator Fedex are in strong primary up-trends. UPS is
testing its November high; a breakout would signal resumption
of the primary up-trend, while a failure to do so would mean
another test of support at the February low. Three bullish
indicators in unison would be a strong positive signal for the
economy.
The Nasdaq 100 and the broader Nasdaq
Composite both started an intermediate up-trend, with
higher lows at [a] followed by higher highs, but Twiggs
Money Flow (21-day) is below zero, warning us to exercise
caution.
Treasury yieldsThe 10-Year treasury yield
respected support at 4.60/4.65% before rallying sharply to
4.85% -- after the new Fed Chairman showed that he is likely
to be tough on inflation. The breakout confirms the first real
up-trend in long-term yields in almost 3
years. Medium Term: The Fed is expected to
make at least one more rate increase this year, lifting the
short-term funds rate to 5.0%. The buoyant property market is
likely to slow, but banks will benefit from wider margins
caused by the steeper yield curve -- so long as rates do not
run high enough to affect loan defaults. Long
Term: The yield
differential (10-year T-notes minus 13-week T-bills) has
started to trend upwards, easing the credit
squeeze.
The Big Picture: Transport indicators indicate an
increase in economic activity, while equity markets are edging
upwards. Rising long-term treasury yields may cause a
slow-down in the property market, but are necessary to keep
the economy on a sound footing.
Gold
Spot gold
closed at $581.50 after breaking through resistance at
$575 earlier in the week.
Medium Term:
Expect a test of the new support level at $570/$575.
The Big Picture: A successful test of support
will confirm that gold has resumed its primary
up-trend.
Crude Oil
Light
Crude is above $66 dollars a barrel and appears headed for a
test of resistance at $70. A rise above $70 would be a strong
bull signal (for gold as well), while a fall below medium-term
support at $58 would be bearish -- and a drop below $55 would
indicate a primary trend reversal.
Currencies
The
dollar is consolidating in a narrowing range against major
trading partners. Medium Term:EUR/USD: The
euro has formed a large triangle
against the dollar. A rise above [F] would indicate that the
euro has started an up-trend, while a fall below [E] would
signal that the primary down-trend will
continue.
USD/JPY: The dollar is consolidating in a narrow band
against the yen. A break above resistance at [E] would be a
bullish sign, while a fall below support at [F] would be
bearish.
Source:
Netdania
The Big Picture:
EUR/USD: A break outside
of the triangle would indicate the future direction of the
primary trend.
USD/JPY: A rise above [A] would signal that
the dollar has commenced a primary up-trend against the
yen; a fall below [B] would signal the start of a
primary down-trend.
United
Kingdom After the break through 6000, the
FTSE 100 encountered resistance at the previous
intra-day highs of 6040, retracing to test support at 5930.
The subsequent rally ended with a weak close and the index
appears headed for another test of support. Medium
Term: Twiggs
Money Flow (21-day) is declining, showing short-term
distribution. A close below support at 5930 would warn of a
secondary correction, while a rise above 6040 would signal
continuation of the up-trend. The Big Picture:
The FTSE 100 is in a strong primary up-trend.
Japan
The Nikkei 225 broke through resistance at
16700. A retracement that respects the new support level would
confirm the breakout. Medium Term: Twiggs
Money Flow (21-day) is rising above zero, signaling
accumulation. The target for the breakout is 17900 (16700 -
(16700 - 15500)). The Big Picture: The index has
resumed the primary up-trend after establishing a strong base
for further gains.
ASX Australia
After a brief consolidation at 5000, the All
Ordinaries rallied strongly to just below 5100. The short
consolidation and strong volume at [2] and [3] indicates
abnormal buying strength in the market. Exceptional volume at
[4] and [5] indicate further resistance, but there is no
retracement because of buying support. A break through
resistance at 5100 would signal another strong rally. Though
less likely, if resistance at 5100 holds we could see a
retracement test the new support level at 5000.
Medium Term: Twiggs
Money Flow (21-day) completed a higher trough [c] above
zero, signaling strong accumulation. The target of 5050 (4900
+ (4900 - 4750)) has been exceeded, but the trend is keeping
its momentum. The Big Picture: The primary
up-trend is accelerating.
Character isn't something you were born with and
can't change, like your fingerprints.
It's something you
weren't born with and must take responsibility for forming.
~ Jim Rohn
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