TDEN

I don’t normally issue a market update 2 days in a row but todays market action warrants it. The U.S. Stock Market, Gold, Oil and the U.S. Dollar are all at critical points on their charts. The S&P500, Gold and Oil are testing the lower limits of their uptrend channels and the U.S. Dollar is testing the upper limit of its downtrend channel. GLD in fact has closed slightly below it’s uptrend channel that has been in place since August. The $64,000. question is which way is the market headed next. For that information we should look at the technical indicators. The stochastics on the S&P, GLD and OIL are all in oversold territory while the stochastic on UUP is in overbought territory. The S&P and OIL are also flagging, another positive sign. While the stochastics have not yet issued a definite buy or sell signal, the levels they have reached appear to indicate that today’s sell off is actually a bear trap and a buying opportunity. The last time the S&P stochastic hit this low was in March 2009 and the market rallied big time. I suspect that the shorts are about to get squeezed hard and the S&P, Gold and Oil will rally to new highs while the U.S. Dollar will resume its downtrend. In the event this turns out not to be the case tight sell stops should be in place on all positions. While a market crash seems very unlikely, an S&P break below its uptrend channel could lead to 1000 or in the worst case a test of its 200 day moving average that currently sits at about 910.

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