Technical Talk: Daily market update (October 5, 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 quite a while and find these tools 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 Index: -90. The S&P 500 Index fell dramatically yesterday in the first several hours of trading. It was only an hour before the close that the market realized it was heavily oversold and rallied dramatically. This rally did not change the overall trend of the market and we expect to once again see the S&P 500 roll over to the downside. Currently the Index is at an area of resistance and we do not expect it to move over the 1,150 area. Look for resistance at 1,134 which is a 50% Fibonacci retracement from the lows that were seen at 1,073 yesterday. We would not rule out our ultimate target zone for this index which is the 1,000 to 950 area. Intermediate and long term traders should continue to hold short positions in this Index.

Suggested S&P 500 trading instruments:
Non Leveraged ETFs: (Long SPY) (Short SH)
2 x Leveraged ETFs: (Long SSO)(Short SDS)

• Silver: -100. The spot silver market, which made a low on September 26 around $26 an ounce, continues to move sideways with little direction. If we see the close this week below $29.60 it will represent a new low close for silver and a push down to our target zone of $20.00 an ounce. As always we will rely on our Trade Triangle technology to keep us on the right side of the trends. Traders who are following our Trade Triangle Technology should be short this market with appropriate stops.

Suggested silver trading instruments:
Non Leveraged ETFs: (Long SLV) (Short the ETF SLV)
Leveraged ETFs: (Long AGQ) (Short ZSL)

• Gold: -55. Like the silver market, gold continues to move sideways and lacks any real direction. One difference between gold and silver at this point, is the monthly Trade Triangle for gold is positive and the monthly Trade Triangle for silver is negative. A potential play could be to buy gold and short silver. I think most traders would be better off just watching from the sidelines until the volatility subsides. Only long term traders should maintain long positions with the appropriate stops in place.

Suggested gold trading instruments:
Non Leveraged ETFs: (Long GLD) (Short the ETF GLD)
Leveraged ETFs:(Long UGL) (Short GLL)

• Crude Oil: -90. The crude oil market continues to follow the movement of the equity markets. Coming from a heavily oversold condition, this market could rally back to between $81 and $82 a barrel, which represents a 50% and 61.8% Fibonacci retracement respectively. Overall we still view the trend in this market as negative. We would not be surprised to see a move down to the $70 a barrel level. Intermediate and long term traders should continue to be short the crude oil market.

Suggested crude oil trading instruments:
Non Leveraged ETFs: (Long USO) (Short the ETF USO)
Leveraged ETFs: (Long UCO) (Short DTO)

• US Dollar Index: +100. What is important for the markets is how we close for the week. At the moment it would appear we have put in a minor top around the 79.80 level for the Dollar Index. This could well be an interim top as the energy field below this market is still very much intact. We may need to see further consolidation above the 79 level before moving to new highs. We continue to be friendly to this market and want to hold positions with money management stops. This Index is coming from a large energy field that is capable of carrying it much higher. Intermediate and long term traders should maintain long positions with the appropriate stops in place.

Suggested Dollar Index trading instruments:
Non Leveraged ETFs: (Long UUP) (Short UDN)
Leveraged ETFs: (Long) (Short)

• CRB Commodity Index: -90. The CRB Index has completed the Fibonacci retracement outlined in previous reports and we would not be surprised to see a a further recovery from current levels. This does not mean that the overall downtrend is over, it just means that we perhaps see an adjustment for the next leg of the move. We expect rallies back to the 302-304 level to run into resistance, and we would not rule out a retest of the recent lows. We expect the trend to continue until our Trade Triangles inform us that the trend has changed. Short, intermediate and long term traders should maintain short positions with the appropriate stops in place.

Suggested CRB Commodity Index trading instruments:
Non Leveraged ETFs: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETFs: (Long UCO) (Short CMD)

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Source: INO.TV, October 5, 2011.

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