Monday, January 9, 2012

Dominance of the US Dollar - Market Analysis for January 6th 2012 by Singaporeseeds

Daily chart for S&P


Daily chart for Dow


Daily chart for NASDAQ


Market analysis from last week:
“We started 2011 at around 1256 on S&P and after rallying to 1373 and then dropping to 1070, it ended the year almost unchanged at 1253. This is against the backdrop of the European crisis and the softening economy of China.
We ended the year right at the 200 day moving average on the S&P.
With the market opening today, everyone will be looking at the January Barometer to determine the direction of the market for the year. Volume will still be light for the rest of the month.
I believe that we are at the beginning of a huge rally that will last for the next 3-4 years. We might dip one or two more times but the S&P should not dip more than 1200.
First target at 1350 and then 1553 for the year 2012.”

Market analysis for this week:
The market went flat after the New Year gap. It seems to be déjà vu as 2012 started almost exactly the same way as 2011.
At the moment, the dollar is dictating the movement of the markets with dollar inversely related to the market. Last Friday saw the end of the uptrend in the dollar rally so we should see some movement this week onwards.
I’m still bullish on the market with targets at 1,350 for the month and 1,553 for the year, but if the S&P drops below its 200 day moving average support at around 1,253, the trend would have changed to bearish and we might close with a bearish January. Should this happen, we are in for a bearish 2012.

Daily chart for the Dollar


Market analysis from last week:
“The dollar is showing a topping pattern on daily charts. On weekly charts, it may continue to hold up for another week or two, but not more. Target is still the same at 22 and 21.70 on UUP.”

Market analysis for this week:
The uptrend in the dollar has ended last Friday. The dollar has rallied for 2 months without any significant pullback and had stopped just below a range of resistances. We should see a pullback starting from this week.
Target at 22 and then 21.70.

Daily chart for Gold


Quote from my last market analysis:
“After the big drop in December 2011, gold should bounce. There’s a bullish divergence pattern over the last 2 weeks. This should bring gold up to around 157 and then 165 over the next 2 weeks. However the longer therm trend is still down.”

Market analysis for this week:
Gold hit my first target last Thursday and stopped below the 200 MA. As long as the dollar is on an uptrend, it will put bearish pressure on commodity prices. With the dollar expected to dip from this week onwards, I believe we should see gold rally.
There is now a pennant pattern on daily charts. Gold would have to break resistance at its 200 MA and then the pennant resistance at 165 on GLD before a strong uptrend would emerge. I believe this movement will start sometime this week onwards.

Daily chart for Crude Oil


Market analysis from last week:
“Crude oil is more bullish than ever, having bounced off it’s 50 and then 200 day moving average in the past week. I believe we should see a dip next week with support at around 37.50 on USO before breaking resistance at 39.50.
Final target will be around 45.20 in 3 month’s time. This will be around 113 on crude oil futures. Expect gasoline prices to increase.”

Market analysis for this week:
Crude gapped up and faded the gap last week. On daily charts, there’s a huge bearish divergence on MACD and RSI.
However I believe crude prices are now very dependent on news coming from Iran and the Straits of Hormuz. If Iran continues to play mind games with US, bearish divergence or not, we will see crude spike to a new high in no time.

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