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.

Market Summary

The GDP (Gross Domestic Product) is the the broadest measure of economic activity and reflects a measure of all goods and services produced in a country during a period of time. Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. The advance quarterly GDP report was released Thursday for Q3 and showed a 3.5% growth rate and an end to the recession according to the GDP. Prior results are as follows: Q2 GDP 2009 -0.7%, Q1 GDP 2009 -6.4%, Q4 GDP 2008 -5.4%, Q3 GDP 2008 -2.7%. The good news of the first positive results in the GDP in a year sent the markets up on Thursday only to see all those gains given up and then some on Friday with a strong sell off.

The image below is my current market timing model. It is a composite reflecting different time frames with the background color of the chart reflecting the trend in the respective time frame. As the background color, either pink or light green, shifts to the left of the image that trend, either up or down, is established. The gap open higher on Thursday, noted by the colored oval on the hour chart, was completely filled on Friday as prices continued their move to the downside. Sentiment is bearish on the short and intermediate term but bullish long term. Click on image to enlarge.


The chart below is of the monthly NASDAQ and shows October having the first monthly decline in prices on the NASDAQ since February. While the trend is still to the upside it must maintain prior support levels as indicated by prior months lows to keep moving to the upside. The market may be in the process of turning down and we will have to watch this closely. Click on chart to enlarge.

The table below shows the price performance of the followed ETFs over several time frames. As can be seen all markets were down for the week with EEM and $RUT leading to the downside. Click on table to enlarge.