Sulaman Chaudhry and Andy Cole send: Well, now that at least one of us is done with finals, we can actually start getting back to focusing on the market. Before we get into the charts, however,
The Big Picture has a great article on how banks cut the requirements for the stress tests in half, meaning that at the end of the day, all these tests were just one big joke. Not that this was news to anyone, but it just goes to show how incompetent Geithner and the whole Obama team are.
Anyways, to the charts we go:
As we had mentioned in previous posts, the markets have been stuck in an up-trending channel for a little over a month now. That changed last week, though, as we actually broke through the upper trend-line to new highs. 950 looks to be the next target, and we could well be in for a move to 1000 as explained after the next chart.
Our own Elliott Wave Analysis of the S&P over the past two years shows that we are in the latter stages of the fourth wave, meaning that we are still due for a fifth and final wave down towards a target of around 600 on the S&P. Should we break 950, the way is clear for a move to 1000, as there is little or no resistance on the way up. After that, however, the trade will most likely be to the short side for the remainder of the year.
Gold (ETF: GLD) has been acting very well as of late. The downtrend that had been in place since last March looks as though it was broken last week. Also, we have just had a positive MACD crossover, which seems to point to more immediate upside within the next few weeks. As long as we can stay and hold above the 50-day moving average, Gold looks like a good trade to the upside here.
From a weekly chart, the picture for Gold looks just as bullish. The GLD looks to have found some credible support at the 50% retracement on the Fibonacci and that inverse head and shoulders remains in play.
Another sector where we might see some significant upside is in the gold miners. Yamana (AUY) seems to be in the process of also forming an inverse head and shoulders here on the weekly chart. A break of the neckline could see AUY trading at $15 relatively quickly.
Barrick (ABX) also looks great here. $40 looks like a good near term target. For those willing to hold longer, $50 doesn’t look all that far away. The whole sector looks similar to these charts. We just threw up the best looking ones.
And as a closer, we leave you with a chart of the dollar. This is a broken chart if we’ve ever seen one and what’s more is that the fundamentals certainly support the dollar trading lower from here. We have Obama flooding the market with dollars, not to mention a broken economy, trillions of dollars in debt, and the Chinese who are intent on backing a new international currency.
