Monday, November 1, 2010

Weekly Forecast - Oct. 31

Here is the weekly report (one day late)

SP500 continues to churn out doji candles showing indecision by the general market.  This marks the 6th day in a row for this indecision.  Market is seeing a lot of movement intraday as it starts out one directions and quickly pairs off towards the end of the day.  Let me be the first to say it is becoming very tiring to watch us go no where.  I do believe this price action may be coming to an end as it looks like we could be topping.

$SPX (hourly)
 Here is an hourly chart of the S&P 500.  Right now we are still caught in this rising channel beginning in September.  Currently we are trading at the bottom of the channel after putting in a nice double top at the 1196 resistance line.  A break through this line would be a good sign for the bullish case.  A break down out of this channel would be a bad sign for the bulls.

The /ES (S&P futures market) is showing nothing......  The beautiful inverted head and shoulders (shown above) is still in play but the market continues to make no forward ground.

The EUR/USD has been a big factor in driving this market up.  The Euro has been gaining ground as the US dollar continues to fall to oblivion.  This huge increase is starting to put in a top and could mark a reversal here.  The upward trendlines are nice and sharp which will make it difficult to hold.  The downward trendline will act as a good resistance which, I imagine, will drive the price 1.37 and then lower.

 GDP/USD is still making a bullish case.  Just completed, an ugly, cup and handle pattern that could continue to drive the market up.  I say ugly because the resistance is not clearly defined in this case.  We can see a false breakout in the middle which makes this pattern a bit unreliable.  A price break of the highs at 1.61 would be a better case.

 USD/JPY has been riding that down trendline for awhile now and is prime for a bounce, which it looks like it is currently getting.  The US dollar can only be driven down so far by the government.

Here is a chart I don't usually include in my weekly report and that is of the fund UUP.  UUP is the bullish fund for the US dollar and it is included to further show the dollar movement.  I highlighted the green box to show how the dollar has shot up, down, back up, then back down.  Also, we can see that the dollar could retract back up to 23.29 before continuing to fall or it could even put in a double bottom at 22.17 before bouncing.

So basically the market is in indecision mode, but I believe it has bearish tones.  Lots of reports due out Wednesday, Thursday, and Friday plus election day tomorrow could shift the market in either direction.

Now is not the time to add to many new long or short positions.  Keep is to stay nimble to we push higher or fall back down.

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