Market Summary

The market is going sideways in a flag formation between the 20 and 50 day moving averages. The holiday season is traditionally bullish as markets stage year end rallies. Sentiment remains bullish. Click on chart to enlarge.

Gold and the small cap index continue to lead for the year. For the week natural gas was up the most followed by the US dollar. Click on table to enlarge.

Market Summary

As can be seen from the chart below the market gapped lower Tuesday and spent the rest of the week climbing back up to where it started the week on Monday leaving the market relatively flat for the week but with an upward bias since the Tuesday low and closing above the 20 day moving average. The market is still bullish however it needs to get above a downtrend line of the recent tops. Good news is likely to follow, such as some resolution of uncertainty in Irish economic problems, and be given the credit with driving the market higher. We will just have to wait and see. Click on chart to enlarge.

Gold and the small cap index continue to lead for the year and natural gas was the big leader for the week up 7.65%. Click on table to enlarge.

Market Summary

While the market has been in a strong uptrend and the Fed has started pumping money into the economy we are off the high of 1227.08 made on Nov. 5th and have made a series of lower highs and lower lows since that time. The market did find support on the 20 day moving average (blue line) Friday but closed below the 1200 mark and it appears the 1220 area is serving as resistance and a double top remembering the 1219.80 high made on April 26. What has really caused the market to pause has been the international news of a debt problem in Ireland and a rumor the Chinese will raise their interest rates to slow inflation and their overheated economy. The commodity markets took a tumble at that news as China is the main importer of raw materials and the Baltic Dry Index has shown signs of rolling over. As our market has made an extended rally off the August lows a correction here seems likely. The 38% Fibonacci retracement level is at 1155 and the 50% retracement level is 1133. Will we get there? We will just have to wait and see. Click on chart to enlarge.

While gold and the small cap index are still in the top positions for the year they are off their best levels. For the week only gasoline and the US Dollar were up with all the rest of the funds in the red. The Emerging market EEM and China FXI were off the most for the week. As a side note interest rates on the 10-Year US Treasury bond have started to rise and may be a harbinger of falling bond prices. These interest rates could be the canary in the coal mine so to speak. Click on table to enlarge.

Market Summary

It has been a very good week in the markets as this bullish rally continues. We broke out above the April 2010 highs with strength as the Fed announced its monetary policy of a 600 billion dollar stimulus and the Republicans gained control of the House. As can be seen on the daily chart of the S&P 500 below we are breaking out above former highs and are likely to go higher. Click on chart to enlarge.

When a daily chart high is taken out we must look to a larger time frame on a weekly chart for the next level of resistance. As can be seen on the weekly chart of the S&P 500 below the next level of resistance is the 1300 mark. What is interesting on the chart below is the formations of a huge cup and handle formation as well as an inverted head and shoulders formation. Both these would indicate we are going higher with the inverted head and shoulders formation pointing to a target in the 1430 range. As I mentioned two weeks ago the current rally occurred after the Fed speech Ben Bernanke gave August 27, 2010 and it is clear that monetary policy is moving the markets higher. With the flow of money being printed by the Fed it is likely we will go higher but it is also likely we will get inflation. Commodity prices have soared and are the place to be to take advantage of this situation. Rising lumber prices indicate rising housing price about a year down the road. China is the beneficiary of a strong US economy however they are raising their interest rates as we are lowering ours strengthening their currency as we weaken ours. Inflation of prices without wage inflation, which has been flat for 30 years, is likely to put strain on consumers. How all this plays out we will just have to wait and see.

As can be seen on the table below a majority of the funds are green in the YTD column. That is a good sign. Gold and the small cap index continue to top the list for the year. For the week, oil and China made the best gains. Click on table to enlarge.

Market Summary

Last Monday the market reach 1196 which is close enough to the 1200 mark to qualify for reaching my target. The question remains was that the high for the current rally? News will drive this market which has been going sideways with many daily dojis. The statement of the FOMC meeting scheduled for Nov. 2-3 and the results of the election as well as two unemployment reports are due next week. I would consider a correction to begin with a close below the 1170 mark. A correction, however, may be good for the market. The falling dollar and rising inflation will help push the market higher. Note the "Golden Cross" where the 50 day moving average crossed above the 200 day moving average at approximately 1122. Click on chart to enlarge.

Gold, the small cap index, and the Nasdaq are the top three in the table below for the year. What is interesting is that the natural gas ETF UNG did the best for the week up 9% but has done worst for the year down -45%. When markets turn what was going down starts going up and what was going up starts going down. Click on table to enlarge.