Sunday, December 11, 2011

Waiting for Good News from Europe - Market Analysis for 12th December 2011 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis from last 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.”

Market analysis for this week:
Well, the markets closed as a doji this week. On Dow, it bounced off its 200 day moving average and on NASDAQ, the 50 day moving average. The market seems to be anticipating some kind of good news from the European Crisis as it shrugged off the bad news reports coming from the ECB discussion and slowly edged upwards this week.
It seems that we should be getting good news from Europe. We shall see about this soon.
Last week, market technical changed overnight from very bearish to bullish with the release of a single news report. We will be getting more of this over the next few months. This shows how news driven this market had become.
I have a target at 1,350 on S&P that should be hit before the end of the month. If the news from Europe is indeed good, we can reach this target overnight. In the meantime, we might just move more or less sideways.

Daily chart for the Dollar


Market analysis from last 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.”

Market analysis for this week:
On weekly charts, the dollar closed as a doji. Everyone seems to be waiting for a news report from Europe to start a new trend. My market analysis is still the same. I’m expecting a double dip for the dollar to 21 on UUP.

Daily chart for Gold


Quote from my last market analysis:
“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.”

Market analysis for this week:
Gold is still in the triangle. Without any significant movement in the markets and in the dollar, gold should not be moving much. We should be seeing a breakout (up or down) for gold, dollar and the markets all at the same time.

Daily chart for Crude Oil


Market analysis from last 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.”

Market analysis for this week:
Crude (USO) formed a support at 37.77 and bounced. This is also the 200 day moving average and meeting point for 2 trendlines.
On candlesticks, it seems to have formed a piercing pattern. Monday has to close as a bullish candle for this pattern to be reliable. The uptrend from early October 2011 should be ending this week.

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