Short-term Forecast for July 7, 2010

| July 7, 2010

Stock Chart Analysis

Synopsis:
The S&P 500 index closed sharply higher today, reacting off of recent lows of the violent downtrend from April and signaling the likely start of a short-term, oversold rally.

Technical Analysis:
Technical indicators are slightly bullish as price action moves higher in the lower Bollinger band, money flow holds near recent highs in negative territory, MACD momentum reacts off of recent lows in negative territory, MACD histograms move higher in negative territory and RSI moves higher in negative territory.

Outlook:
A close well above congestion resistance at current levels would predict a move up to downtrend resistance near 1,095, while a close below the recent low at 1,023 would reconfirm the downtrend from April and forecast additional losses. A confirmed break above congestion resistance at current levels is slightly more likely (~60% probable).

Synopsis:
The European Top 100 index closed sharply higher today, reacting off of recent lows of the downtrend from April.

Technical Analysis:
Technical indicators are effectively neutral as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum holds near recent lows in negative territory, MACD histograms move higher in negative territory and RSI trends up toward the 50 level. A moderate positive divergence between price action and both momentum and oscillators results in a slightly bullish condition overall.

Outlook:
A close above congestion resistance at current levels would predict a move up to congestion resistance at 215.50, while a close well below congestion support near 203 would reconfirm the downtrend from April and forecast substantial additional losses. The uptrend continuation scenario is slightly more likely (~60% probable).

Synopsis:
The Shanghai Composite index closed moderately higher today, reacting off of recent lows of the downtrend from April.

Technical Analysis:
Technical indicators are effectively neutral as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum reacts off of recent lows in negative territory, MACD histograms move higher in negative territory and RSI moves higher in negative territory. A slight positive divergence between price action and momentum results in a neutral to slightly bullish condition overall.

Outlook:
A close above congestion resistance at 2,500 would predict a move up to congestion resistance in the 2,600 area, while a close below the recent low near 2,360 would reconfirm the downtrend from April and predict additional losses. Both scenarios are equally likely.

Treasury Chart Analysis

Synopsis:
The 30-year bond yield closed sharply higher today, reacting off of recent lows of the downtrend from April. The downtrend has now been unable to move down to a meaningful new low for three sessions, and a slight positive divergence suggests that the formation of a short-term bottom has become more likely.

Technical Analysis:
Technical indicators are neutral to slightly bearish as yields react off of recent lows near the bottom of the Bollinger bands, MACD momentum holds near recent lows in negative territory, MACD histograms move higher in negative territory and RSI moves up to a new high in negative territory. A slight positive divergence between yields and both momentum and oscillators results in a neutral to slightly bullish condition overall.

Outlook:
A close above downtrend resistance near 4.01% would predict a move up to congestion resistance in the 4.10% area, while a close below the recent low near 3.87% would reconfirm the downtrend from April and forecast additional losses. Both scenarios are equally likely at the moment.

Synopsis:
The 10-year note yield closed sharply higher today, reacting off of recent lows of the downtrend from April. The downtrend has now been unable to move down to a meaningful new low for three sessions, and a slight positive divergence suggests that the formation of a short-term bottom has become more likely.

Technical Analysis:
Technical indicators are slightly bearish as yields react off of recent lows near the bottom of the Bollinger bands, MACD momentum holds near recent lows in negative territory, MACD histograms move higher in negative territory and RSI moves higher in negative territory. A slight positive divergence between yields and both momentum and oscillators results in a neutral condition overall.

Outlook:
A close above downtrend resistance near 3.06% would predict a move up to congestion resistance in the 3.18% area, while a close below the recent low at 2.93% would reconfirm the downtrend from April and forecast additional losses. Both scenarios are equally likely.

Currency Chart Analysis

Synopsis:
The US dollar index closed slightly lower today, reconfirming the short-term downtrend from June.

Technical Analysis:
Technical indicators are moderately bearish as price action moves down to a new low near the bottom of the Bollinger bands, MACD momentum moves lower in negative territory, MACD histograms drift lower in negative territory and RSI drifts lower in negative territory.

Outlook:
A close above downtrend resistance near 85.40 would predict a move up to congestion resistance at the 87.30 level, while a close below current levels would reconfirm the short-term downtrend from early June and predict additional losses. The downtrend continuation scenario is more likely (~70% probable).

Synopsis:
The Euro index closed slightly higher today, moving up to a new high for the short-term uptrend from early June.

Technical Analysis:
Technical indicators are moderately bullish as price action moves up to the top of the Bollinger bands, MACD momentum moves higher in positive territory, MACD histograms drift up to recent highs in positive territory and RSI drifts higher in positive territory.

Outlook:
A close above congestion resistance in the 127 area would reconfirm the uptrend from June and forecast additional gains, while a close below short-term uptrend support near 123 would predict a move down to the recent low at 119. The uptrend continuation scenario is more likely (~70% probable).

Synopsis:
The Japanese Yen index closed slightly lower today, reversing large early session gains late in the day. The index has now failed to move up to a meaningful new high for the past three sessions, suggesting that a correction has become more likely. The rally has been rising at an unsustainable rate over the past three weeks, and a violent correction will likely occur when it ends.

Technical Analysis:
Technical indicators are slightly bullish as price action holds near recent highs at the top of the Bollinger bands, MACD momentum holds at recent highs in positive territory, MACD histograms retreat from recent highs in positive territory and RSI retreats from recent highs in overbought territory.

Outlook:
A close well above current levels would reconfirm the uptrend from May and forecast additional gains, while a close below new congestion support in the 113.20 area would predict a move down to congestion support near 111.70. Both scenarios are equally likely at the moment.

Precious Metal Chart Analysis

The Gold Currency Index (GCI) is a composite of gold prices in the currencies of 10 of the largest economies in the world as defined by GDP. It is therefore currency independent, reflecting the true, intrinsic value of gold as an international currency itself.

Synopsis:
The GCI closed moderately higher today, reacting off of recent lows of the short-term downtrend from late June.

Technical Analysis:
Technical indicators are moderately bearish as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum moves lower in negative territory, MACD histograms hold at recent lows in negative territory and RSI reacts off of recent lows in negative territory.

Outlook:
A close above congestion resistance in the 31.80 area would predict a move up to the recent high at 32.75, while a close below congestion support at 30.40 would reconfirm the short-term downtrend and forecast additional losses. The downtrend continuation scenario is more likely (~70% probable).

Synopsis:
Gold in US dollars closed moderately higher today, reacting off of recent lows of the short-term downtrend from late June.

Technical Analysis:
Technical indicators are moderately bearish as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum moves lower in negative territory, MACD histograms drift lower in negative territory and RSI holds near recent lows in negative territory.

Outlook:
A close above congestion resistance in the $1,220 area would predict a move up to long-term congestion resistance near $1,240, while a close below the recent low near $1,193 would reconfirm the short-term downtrend from late June and forecast additional losses. The downtrend continuation scenario is more likely at the moment (~70% probable).

Synopsis:
The Gold Miners index closed sharply higher today, reacting off of recent lows of the short-term downtrend from late June.

Technical Analysis:
Technical indicators are moderately bearish as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum moves down into negative territory, MACD histograms react off of recent lows in negative territory and RSI reacts off of recent lows in negative territory.

Outlook:
A close above congestion resistance in the 1,400 area would predict a test of congestion resistance near 1,440, while a close below the recent low at 1,350 would reconfirm the short-term downtrend from late June and forecast additional losses. The downtrend continuation scenario is slightly more likely (~60% probable).

Commodity Chart Analysis

Synopsis:
The CRB index closed sharply higher today, reacting off of recent lows of the short-term downtrend from June.

Technical Analysis:
Technical indicators are neutral to slightly bearish as price action reacts off of recent lows in the lower Bollinger band, MACD momentum holds at recent lows in negative territory, MACD histograms react off of recent lows in negative territory and RSI moves up to the 50 level.

Outlook:
A close above congestion resistance in the 258.50 area would predict a move up to the recent high at 265, while a close below congestion support near 253 would forecast a move down to previous lows at the 249 level. Both scenarios are equally likely at the moment.

Synopsis:
Oil closed sharply higher today, reacting off of recent lows of the short-term downtrend from late June.

Technical Analysis:
Technical indicators are slightly bearish as price action reacts off of recent lows near the bottom of the Bollinger bands, MACD momentum drifts lower in negative territory, MACD histograms react off of recent lows in negative territory and RSI reacts off of recent lows in negative territory.

Outlook:
A close above congestion resistance near $75 would predict a move up to strong congestion resistance in the $80 area, while a close below the recent low at $72 would reconfirm the short-term downtrend and forecast a move down to congestion support near $70. Both scenarios are equally likely.

Category: Forecasts, Short-term Forecasts


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