Market Summary

The SPY failed at the 110 price level and looks to be headed lower. In a move similar to the gap up opening of this shortened trading week, Friday saw a dramatic gap down move leaving a second Island Top formation in as many weeks. The news that Dubai World was putting off payment on a $59 Billion dollars in debt that was released to the media when US markets were closed for the Thanksgiving holiday sent world futures markets falling rather dramatically. Though markets regained composure when they re-opened off their worst levels still there was a gap down and that shook up investor confidence especially in the banking sector. Market short term sentiment has again turned bearish and market volatility shot up 20% on Friday.

In the image below on the 240 minute chart both the gap up and gap down are noted by the blue ovals. The prices between the ovals represents what may be called a Bull Trap, if in fact prices continue to decline. The Weekly chart shows what is called a Tweezers Top formation on the two recent red weekly candles at 111.69 and that is a reversal chart pattern. This means that there is significant resistance at that level and the path for least resistance for the markets is to trade lower, at least in the short term. I heard Warren Buffett recently say, "The next hour is uncertain but the long term is fairly certain." and the long term is still bullish. Click on image to enlarge.

The biggest gainer this week was the natural gas ETF UNG up nearly 10% for the week, though it is off the most for the year at -60% YTD. The biggest loser for the week was the China ETF FXI down -3.49%. Click on table to enlarge.

SPY holds the 110 level

In a rather dramatic gap up opening as illustrated by the blue oval in the image below short term market sentiment made an abrupt reversal back to bullish. As noted by a trader friend the day after Thanksgiving is historically bullish. Click on image to enlarge.

Market Summary

Short term market sentiment as illustrated by the background color of the right side of the image below has turned bearish. Although prices did get above the 110 area of resistance that price did not hold and a failure at that point could signal a reversal in the market trend. Click on image to enlarge.

I have added the PowerShares DB US Dollar Index Bullish (UUP)to the list below to start tracking the US Dollar. It is well know that when the US Dollar goes up the stock market goes down and visa versa. It is interesting to note that the UUP is green in the 1 Week and 4 Week columns, although just barely in the 4 Week column. This could be a double bottom in the dollar or just a bounce. Which it is we will just have to wait and see. Click on table to enlarge.

NASDAQ Island Top

The image below shows that there is a three-day Island Top on the NASDAQ Composite Index and that is a bearish sign for US markets. An Island Top is formed by a gap up which we had on Monday, and is followed by a gap down which we had today. Since we have made a higher high this month than last month and we have broken the trend line from the October lows it appears the market is rolling over and will be testing those lows to find support. Click on image to enlarge.

Mid-Week Review

The market continues its march upward and broke out of the 110 resistance area which should now act as support. The next target is the 112 area. The market is in an uptrend and looks to continue in that direction. However, markets tend to test support and resistance areas and which way it goes we will just have to wait and see. Click on image to enlarge.

Market Summary

The market made a new high this week and closed off its recent high at the high end of the 104.00 - 110.00 range on the SPY. However, market prices also look to be rolling over and could make a pull back. There is a gap on the daily chart in the image below noted by the blue dot. Should the market gap lower that would create an island top and that would be very bearish. Click on image to enlarge.

Of the markets followed the EEM and FXI continued to perform the best on a weekly basis. Gold is continuing to make new all time highs. To me this reflects a lack of confidence in currencies, particularly the US Dollar. India just purchased 200 tons of gold last week from the IMF. It was the biggest single purchase of gold by a central bank in the past 30 years and could be seen as a signal governments around the world are becoming uncomfortable about the sliding value of the dollar. Click on image to enlarge.

Top of the range

While the intermediate term, as depicted by the green background color on the Daily chart in the image below, has turned bullish price remains in a six point range from 104.00 to 110.00 on the SPY. A breakout above this range would be very bullish as a break below this range would be bearish. There are divergences with indicators such as the RSI but the market continues to march higher. It is my understanding that today is a Bradley turn date. See here Which side of this range we break out to we will just have to wait and see. Click on image to enlarge.

Market Summary

It was a very bullish week in the market as seen in the image below. It was still however a week with a lower high and lower low than the week before. If this last weeks low is broken to the downside that would be very bearish. Unemployment figures were released showing unemployment standing at 10.2%. That number is expected to rise by some analyst though it is considered a lagging indicator of the recovery of the economy. Short term and long term the sentiment is bullish. Click on image to enlarge.

The table below shows that China FXI lead the pack to the upside up nearly 6% last week followed by the Emerging Market EEM up 5.5%. Gold also was a big winner this last week breaking the $1100.00 per ounce level intraday on Friday at $1101.40. Click on table to enlarge.