Sunday, April 7, 2013

Preview to the upcoming trading week...

Trading this week could be substantially more volatile than we have seen in recent months; maybe since late July and August of 2011.  All of the major markets have tested long term monthly and weekly resistance or support levels (depending on the particular market) and have started the process of reversing major trends. We'll kick things off with a monthly, weekly and daily chart of the Dow Jones Industrial Avg.

As it stands now, the info that we are currently working with (obviously, as new data is received adjustments will need to be considered) suggests to me that a breakdown in the financial markets should take the Dow down to the 13,000-13,250 area, at a minimum.

The next several charts are of the E-Mini S&P 500 Futures.  I have displayed these charts in the same manner as the DJIA except I added some additional intraday charts. These additional charts are more detailed and show more areas that will provide resistance and support as this move lower unfolds. However, I must point out, the trend lines/channels  in the 4 hr. and 60 min. charts will not have the same level of influence as the monthly and weekly.

Based on the price structure and long term trend lines the markets have been "playing chicken" against, history suggests a big move is coming and it probably won't be pretty.

The gold market is also at a major crossroad.  If gold does not sustain the bounce that happened Friday, you could see it collapse over the next 3-6 weeks.  We will have more clues in the coming days.  It is imperative that gold start moving higher relatively quickly.  Several positive closes above the 1650-1660 area needs to happen in order to avert a possible crash down to 1250-1300.

That brings me to the last market I will cover this weekend, the U.S. Dollar Index Futures.  The mirror opposite of the stock markets and gold, the dollar appears to be setting up for a move towards 87 in the short term.  In the intermediate term it looks like it wants to test 93-95.  The charts below reveal where the 79-80 area held several attempts by sellers to take the dollar towards it's yearly lows.  However, because they could not achieve a breakdown in 'ole bucky a large move higher appears to be coming soon.  Any such move would be the perfect catalyst to send the financial and precious metals  markets down 10% or more, perhaps in a crash like fashion.

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