Sunday, January 9, 2011

Weekly Forecast - Jan 9th

First off let me apologize for the late Weekly Forecast.  I usually try to have these out by Sunday afternoon if not Saturday.  We are currently working on converting this site from a blog to a real site.  Hopefully we will have the new site online by the end of the week.

As for the forecast, this week starts earning season so the upcoming weeks should be full of excitement.  Look for more day trading to happen as we play the earnings game.  As always we will kick this earnings season off with Alcoa reporting tomorrow before the bell. 

Let's see what this week has in store for us....

S&P 500
The SPX has had a continued run up since last September as it has climbed about 230 points.  Since December it seems that every new run up is met with a period of consolidation which typically last about a week.  We are in that period of consolidation right now.  We had a nice push up on Monday and have kept a solid range throughout the week.

SPX (hourly)
On the SPX hourly chart we can see that run up and period of consolidation.  Currently we are stuck between the 1276 and the 1262 area, and as you can see from the rest of the chart our consolidation periods don't normally take up such a wide price range.  It is also good to notice we are forming a bit of head and shoulders as the market works on the right shoulder.  This leads me to believe that if the bears manage to take the 1262 level before the bulls claim 1272 then we could have a game changer.

The EUR/USD saw a major decline last week pushing it past all support levels.  It now sits below its upward trendline and 150 and 200 day moving averages.  Threre are not to many support levels between here and 1.26.  We could see a retrace back to the 1.30 level but further weakenss should be expected out of the EUR/USD.

 GBP/USD still remains caught under its downward trendline.  It is also bouncing between the 150 and 200 day moving average.  The currency pair has been on a short term upward trendline but even that might not be enough to push in through the downward trendline at 1.56.  The pound/dollar will continue to be weak until it makes a higher-high at 1.59.  I would expect to see another sell off at the 1.56 level to push it back down to 1.534.

USD/JPY saw a nice bounce back with strength last week.  The strength pushed the pair through the 50 day moving average and resistance at 82.79.  It is now finding support at both of these levels.  Further strength could be seen out of this pair as it pushes towards resistance at 83.67.  I would like to see a move towards 84.41 out of this pair, and I think that move may be in the cards.

The NYSI Reversal Indicator in all its glory is still calling for a further move to the upside.  Right now it is caught in the middle with no signs of stopping.  Shorts should be careful on entering any trades here until it reaches the extremes.

Should be a quiet week for economic reports:

Monday: Nothing major
Tuesday: Nothing major
Wednesday: Import/Export Prices, Petro Status (nothing major)
Thurday: Internatinoal Trade, Producer Price Index, Jobless Claims
Friday: Consumer Price Index, Retail Sales, Industrail Production

I think this week could experience some weakness in the markets.  If the markets which to remain correlated with its currency pairs than further weakness should be expected.  As mentioned earlier we also have the beginning of earnings season so record earnings could change the tone of the weak from negative to positive.  No real weakness will happen until the bears take the 1263 level.  As of right now the bulls are still in control with dip buying still remaining strong.  We will definitely be on the look out for short setups this week.

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