Technical Talk: Daily market update (September 21, 2011)

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Adam Hewison, charting strategist of INO.TV, brings you another edition of his invaluable service of daily technical updates on the ups and downs of various markets. This short analysis is a great tool for keeping one’s finger on the pulse and timing the markets. I have personally been using the INO/Market Club software for about two years and can vouch for these tools being extremely useful.

Click the image below to hear Adam’s latest views on gold , silver, the US Dollar Index, the CRB Index, crude oil and the S&P 500 Index. Also, click here to have an instant analysis of any ticker symbol in your portfolio performed by INO.

Here is a summary of his technical outlook:

• S&P 500: +60. For the past six weeks, the S&P 500 index has been moving sideways with resistance around the 1,220 area and support coming in around 1,120. It would also appear that approximately every 11 or 12 days the market will make a high and then pull back for the next 5 or 6 days. If the same pattern repeats, the next swing in the S&P 500 could be on the downside. This would be in line with the major trend for this market. With a Chart Analysis Score of + 60, we would recommend trading this market using the Williams % R indicator and the Donchian Trading Channels. Long-term traders should continue to be short or be out of the market completely, and in a cash position. Intermediate term traders should be on the sidelines waiting for either a buy or sell signal based on our Trade Triangle technology.

• Silver: -60. It would appear that the spot silver market is beginning to consolidate over the $39 an ounce level. Silver is very oversold and right for a bounce. With a Chart Analysis Score of -60 this market is in a trading range and we are currently at the lower levels of the Donchian trading channel. It may take a few days to consolidate, but we expect this market will move up from current levels. Cyclically, we are close to a low. We want to continue to monitor this market looking for an area to add to long positions. Long term traders should maintain long positions in this market with appropriate stops. Intermediate term traders should now be on the sidelines waiting for either a buy or sell signal based on our Trade Triangle technology.

• Gold: +55. The gold market continues to bounce along with support coming in to the spot market at $1,760 an ounce. We want to pay close attention to the gold market this week, as we feel it is very close to a cyclical low. Here are the reasons why: (1) we are at the lower range of the Donchian trading channel, (2) the market is oversold, with a possible bullish divergence on the Williams % R indicator, and (3) the MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days. We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long term traders should maintain long positions with the appropriate stops in place.

• Crude Oil: -75. There is not much going on in the crude oil market, as it continues to remain in a fairly broad trading range with resistance very evident at the $90 a barrel level. Support comes into this market between $84 and $84.50. The crude oil market is presenting a mixed picture at the moment with our longer term monthly Trade Triangle negative and our intermediate term weekly Trade Triangle positive. This has created a trading range. Crude oil remains in a sort of sideways motion, but with a bias to testing the lower range of the Donchian trading channel. The Williams % R indicator is stuck in the middle giving no real clue as to direction. Also pay attention to the MACD since it is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. We do not think that the crude oil market is ready to go higher, based on our long term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.

• US Dollar Index: +90. Our comments for the Dollar Index remain pretty much the same as yesterday. The Index continues to consolidate above its original breakout point of 76.10. We are positive on this market and expect to see it move higher. We would like to see a close over 77.60 as that would indicate a new high close for this Index and set it up to move to our initial target zone of 80.00. On any type of pullback we would not be happy to see this market close below the 76.00 level. Longer term this market looks poised to move much higher. This Index is coming from a large energy field that is capable of carrying it much higher, possibly up to the 80.00 – 81.00 area. Short, intermediate and long term traders should maintain long positions with the appropriate stops in place.

• CRB Commodity Index: -90. This index is very close to making what we consider a fairly significant low and we would not be surprised to see a rally from current levels. Cyclically this market has come back to an area where it should begin to find support. We are at the lower levels of the Donchian trading channel and heavily oversold on the Williams % R indicator. I expect that over the next few days we will see this market consolidate for a recovery rally. Short, intermediate and long-term traders should maintain short positions with the appropriate stops in place.

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Source: INO.TV, September 21, 2011.

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