Short-term Forecast for July 20, 2007

| July 20, 2007

Synopsis:
The S&P 500 index closed sharply lower today, moving down toward uptrend support.

Technical Analysis:
The S&P 500 index closed sharply lower today, moving down toward support of the uptrend from late June. Technical indicators are now slightly bearish as money flow retreats from recent highs in positive territory, MACD momentum retreats from recent highs in positive territory, MACD histograms trend lower in positive territory and RSI trends down toward the 50 level.

Outlook:
Any close above the recent high near 1,554 would reconfirm the uptrend and forecast additional gains, while a move below uptrend support at 1,528 would forecast a return to congestion support in the 1,492 area. Both scenarios are equally likely (50%/50%).

Treasuries

Synopsis:
The 30-year bond closed sharply higher today, moving up to a new short-term high.

Technical Analysis:
The long bond closed sharply higher today, moving up to a new high for the short-term uptrend from June. Technical indicators are moderately bullish as MACD momentum trends up into positive territory, MACD histograms move higher in positive territory and RSI moves higher in positive territory.

Outlook:
A close above current levels would reconfirm the current uptrend from June and forecast additional gains, while a close below uptrend channel support near 107.10 would suggest a move back down to recent long-term lows. The uptrend continuation scenario is more likely (70%/30%).

Currencies

Synopsis:
The US dollar index closed moderately lower again today, reconfirming the current downtrend.

Technical Analysis:
The US dollar index closed moderately lower today, reconfirming the long-term downtrend from early this year. Technical indicators are moderately bearish as MACD momentum moves down to a new low in negative territory, MACD histograms trend higher in negative territory and RSI holds near recent lows in oversold territory.

Outlook:
Any close below current levels would reconfirm the long-term downtrend and forecast additional losses, while a move above resistance at the upper boundary of the downtrend channel near 80.65 would suggest the start of a new uptrend and forecast another test of the congestion resistance near 81.40. The downtrend continuation scenario is more likely (70%/30%).

Precious Metals

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 again today, moving up toward the top of the recent channel.

Technical Analysis:
The GCI closed moderately higher today, moving up toward the top of the long-term channel from the beginning of the year. Technical indicators are now bullish as MACD momentum trends higher in positive territory, MACD histograms trend higher in positive territory and RSI trends higher in positive territory.

Outlook:
A close above the top of the long-term channel would confirm the start of a new uptrend and forecast additional gains, while a close below the bottom of the channel would signal additional losses. The new uptrend scenario is more likely (70%/30%).

Synopsis:
The Gold Miners index closed slightly lower today, consolidating recent gains of the current uptrend.

Technical Analysis:
The Gold Miners index closed slightly lower today, consolidating recent gains of the current uptrend from late June. Technical indicators are bullish as MACD momentum trends higher in positive territory, MACD histograms drift higher in positive territory and RSI holds near recent highs in overbought territory.

Outlook:
A close well above current levels would reconfirm the uptrend from June and forecast additional gains, while a move below uptrend channel support at 1,130 would predict the start of a new downtrend. The uptrend continuation scenario is more likely at the moment. (70%/30%).

Category: Forecasts, Short-term Forecasts


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