Short-term Forecast for August 15, 2007

| August 15, 2007

Synopsis:
The S&P 500 index closed sharply lower today, reconfirming the powerful downtrend from July.

Technical Analysis:
The S&P 500 index closed sharply lower today, moving down to a new short-term low and reconfirming the powerful downtrend from July. Technical indicators are extremely bearish as money flow trends down to a new low in negative territory, MACD momentum trends down to a new low in negative territory, MACD histograms trend lower in negative territory and RSI moves down toward oversold territory.

Outlook:
A close above downtrend resistance at 1,475 would suggest the start of an oversold reaction and predict a move up to congestion resistance near 1,492, while a close below current levels would reconfirm the downtrend and forecast additional losses. The downtrend continuation scenario is highly likely (80%/20%).

Treasuries

Synopsis:
The 30-year bond closed moderately lower today, continuing to hold near uptrend support.

Technical Analysis:
The long bond closed moderately lower today, continuing to hold near support of the uptrend from June. Technical indicators are essentially neutral as MACD momentum drifts lower in positive territory, MACD histograms hold at recent lows in negative territory and RSI retreats from recent highs in positive territory.

Outlook:
A close above the recent high at 110.70 would reconfirm the current uptrend from June and forecast additional gains, while a close below uptrend channel support near 109.40 would suggest the start of a new downtrend. The uptrend continuation scenario is slightly more likely (60%/40%).

Currencies

Synopsis:
The US dollar index closed sharply higher again today, reconfirming the current uptrend.

Technical Analysis:
The US dollar index closed sharply higher again today, reconfirming the reaction off of the long-term low earlier this month. Technical indicators are bullish as MACD momentum trends up into positive territory, MACD histograms trend higher in positive territory and RSI trends higher in positive territory.

Outlook:
Any close above current levels would reconfirm the uptrend and forecast additional gains, while a move below support at the lower boundary of the uptrend channel near 81.45 would suggest the start of a new downtrend. The uptrend continuation scenario is highly likely (80%/20%).

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 slightly higher today, moving up toward the top of the recent channel.

Technical Analysis:
The GCI closed slightly higher today, moving up toward the top of the long-term channel from the beginning of the year. Technical indicators are moderately bullish as MACD momentum drifts higher in positive territory, MACD histograms hold below recent highs in positive territory and RSI drifts 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 slightly more likely (60%/40%).

Synopsis:
The Gold Miners index closed sharply lower today, reconfirming the powerful downtrend from July.

Technical Analysis:
The Gold Miners index closed sharply lower today, reconfirming the powerful downtrend from July and breaking below congestion support at 1,000. Technical indicators are extremely bearish as MACD momentum trends lower in negative territory, MACD histograms trend lower in negative territory and RSI trends lower in negative territory.

Outlook:
A close above downtrend resistance at 1,050 would suggest the start of an oversold reaction, while a close below current levels would reconfirm the downtrend and forecast additional losses. The downtrend continuation scenario is highly likely. (80%/20%).

Category: Forecasts, Short-term Forecasts


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