Monday, December 5, 2011

Decision Week! - Market Analysis for 5th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis for this week:
What a difference a week makes!

http://www.bloomberg.com/news/2011-11-30/treasuries-set-for-monthly-gain-as-eu-struggles-to-stem-contagion-concern.html

On Wednesday, the US Federal Reserve and five other central banks cut the cost of emergency dollar funding for European banks in response to the continent’s sovereign-debt crisis.
This sparked a huge rally on Wednesday that smashed through all resistances on my charts. Non-farm payrolls on Friday was also expected to be good (which also turned out good) and this added to the euphoria.
On the S&P, we are just below the 200 day moving average and the down channel that we had been in since June 2011. If we break above the 200 day MA, it would be the start of another rally that might bring us back up to the all time high around 1,550.
The direction of the market this week will determine the direction of the market over the next few months.

Daily chart for the Dollar


Market analysis for this week:
Instead of breaking through the 22.50 resistance, the dollar made a bearish divergence on both MACD and RSI. Fundamentally, the Fed boosting liquidity for Europe and the expectation of a 3rd round of stimulus in US is not giving much boost to the value of the US dollar.
http://www.bloomberg.com/news/2011-11-30/oil-rises-in-new-york-as-central-banks-led-by-fed-cut-dollar-funding-costs.html
I’m expecting the start of a new downtrend down to 21 over the next few days.

Daily chart for Gold


Quote from my last market analysis:
“Gold had been forming a triangle pattern since August 2011. A triangle pattern is formed when volatility and price movement had been decreasing gradually. This pattern usually results in a surge of activity together with a large movement in price. This can be either up or down. With the problems occurring around the world, I would expect a surge up in price soon.”

Market analysis for this week:
Gold is still within the triangle. However I’m expecting a movement (can be either up or down) this coming week. With the dollar expected to drop over the next few weeks, and the Fed boosting liquidity, Gold is set to make a new high soon.

Daily chart for Crude Oil


Market analysis for this week:
Crude oil formed an inverse head and shoulders pattern on daily charts. This should bring USO up to 42.50 over the next few weeks. With the US dollar expected to fall, this should not come as a surprise.

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