The Dow Jones

I will got straight to the point. Although it’s nice to see your stocks putting a nice recovery I personally think the danger is growing by the day here. Here are some of my arguments:

• The index bounced from the psychological level 12,000 - was it because of the rate cuts? Possibly but I think it was mostly short sellers locking their hefty profits. What would you do in their situation, you had a nice run down from 13,500 to the now round 12,000 — would you not cover?
• I feel desperation in the US Government to avoid a recession and to save the markets — the double rate cut along with the "artificial" re-enforcement talks from the American leaders has worked so far — but for how long? can they keep cutting rates without generating inflation? What else is there under their sleeves? I don’t think there’s much more, but, I’m neither an economist or smart..

Here’s the daily and weekly charts for the INDU. Note the bounce from the 12,000 level and the low volume on the up bars (compared to the down bars) — it’s clearly seen on the weekly chart. Also important to note is the resistance ahead in the 12,750-13,000 area. The index could try hitting the 13,000 but would face strong resistance there…

For additional fun, we can look at the Nasdaq 100 (NDX) index. Last Friday was an interesting day as there was a lot of volume and yet the index didn’t go up… this candle displays no conviction to me…

Sectors Highlights

The Homebuilders ($HGX) is still sustaining the reversal but looks stretched from a Kelter’s point of view. It could pullback before continuing. The following are the weekly chart and a daily with bands.

The Brokers ($XBD) is also in similar situation, it was a nice reversal but looks a bit stretched and could pullback. I would keep a tight stop (if that’s your style).

The Oil Services ($OSX) is still in an uptrend but could potentially go down some more and test that trendline on the weekly chart. The daily chart with bands also show it needs further strength to be bullish.

The Energy (XLE) seems to have bounced from the weekly trendline and also on the Keltner band (aren’t they nice?)… looks bullish to me. Here’s the weekly chart.

The Semis ($SOX) still look very bullish and will be facing huge resistance ahead. Almost looks like a good short (soon).

Gold and Crude

Although Gold has pulled back slightly over the last few days I believe the trend is still up and strong (and could get stronger as the good news on the Stock Market start to fade).

The Crude Oil is displaying some recent weakness but still looks in a range to me… no firm bearish signs yet.

Currencies

The US Dollar failed to sustain the reversal and is now below the lower range but could bounce before continuing down…

The Euro continues to capitalize on the USD’s weakness and has made a third attempt to break to the upside… I see strong resistance ahead, look the weekly chart (right).

That’s it for today folks, have a busy day ahead of me — (cinema).

Have a great weekend.