Short-term Forecast for January 16, 2008

| January 16, 2008

Synopsis:
The S&P 500 index closed moderately lower today, reconfirming the current downtrend.

Technical Analysis:
The S&P 500 index closed moderately lower today, reconfirming the powerful downtrend from the end of December. Technical indicators are bearish as money flow holds near recent lows in negative territory, MACD momentum trends lower near recent lows in negative territory, MACD histograms move down to recent lows in negative territory and RSI moves down toward oversold territory.

Outlook:
A close below current levels would reconfirm the current downtrend and forecast additional losses, while a move above nearby congestion resistance in the 1,420 area would suggest the start of a secondary reaction. The downtrend continuation scenario remains more likely at the moment (70% probable).

Treasuries

Synopsis:
The 30-year bond closed slightly lower today, consolidating recent gains.

Technical Analysis:
The long bond closed slightly lower today, consolidating recent gains of the uptrend from late December. Technical indicators are bullish as MACD momentum trends higher near recent highs in positive territory, MACD histograms hold near recent lows in positive territory and RSI retreats from recent highs in positive territory.

Outlook:
A close well above the recent high near 120 would reconfirm the current uptrend and forecast additional gains, while a close below uptrend channel support near 119 would suggest a test of nearby congestion support in the 118 area. The uptrend continuation scenario is slightly more likely (60% probable).

Currencies

Synopsis:
The US dollar index closed sharply higher today, beginning a test of downtrend resistance.

Technical Analysis:
The US dollar index closed sharply higher today, testing resistance at the upper boundary of the intermediate-term downtrend from the middle of December. Technical indicators are neutral as MACD momentum turns higher near recent lows in negative territory, MACD histograms move up toward the 0 level and RSI tests resistance at the 50 level.

Outlook:
A close well above downtrend channel resistance near 76.30 would suggest the start of a new intermediate-term uptrend and a test of recent highs near 77.75, while a move below congestion resistance near 75.50 would forecast a test of the long-term low near 75. Both scenarios are equally likely at the moment.

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 lower today, consolidating recent gains.

Technical Analysis:
The GCI closed moderately lower today, consolidating recent gains of the uptrend from mid December. Technical indicators are moderately bullish as MACD momentum backs away from recent long-term highs in positive territory, MACD histograms retreat from recent highs in positive territory and RSI drops below the overbought level.

Outlook:
A close above the recent high near 21.90 would reconfirm the current uptrend and forecast substantial additional gains, while a close below congestion support at 21 would predict a test of uptrend channel support in the 20.40 area. The uptrend continuation scenario is slightly more likely at the moment (60% probable).

Synopsis:
The Gold Miners index closed sharply lower today as it continues to consolidate recent gains.

Technical Analysis:
The Gold Miners index closed sharply lower today, continuing to consolidate recent gains of the uptrend from mid December. Technical indicators are neutral as MACD momentum corrects off of recent highs in positive territory, MACD histograms move down toward the 0 level and RSI moves down toward the 50 level.

Outlook:
A close above the recent high near 1,475 would reconfirm the current uptrend from December and forecast additional gains, while a close below current levels would reconfirm the current short-term downtrend. The short-term downtrend continuation scenario is slightly more likely at the moment (60% probable).

Category: Forecasts, Short-term Forecasts


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