Short-term Forecast for January 23, 2008

| January 23, 2008

Synopsis:
The S&P 500 index closed sharply higher today, signaling a short-term reversal.

Technical Analysis:
The S&P 500 index closed sharply higher today, signaling the probable start of a short-term reaction after the large losses of the downtrend from the end of December. Technical indicators are moderately bearish as money flow trends down to a new low in negative territory, MACD momentum holds near recent lows in negative territory, MACD histograms react off of recent lows in negative territory and RSI moves up out of oversold territory.

Outlook:
A close below the recent low near 1,310 would reconfirm the current intermediate-term downtrend and forecast additional losses, while a move above downtrend channel resistance in the 1,375 area would suggest the start of a secondary reaction. Both scenarios are equally likely at the moment.

Treasuries

Synopsis:
The 30-year bond closed moderately higher today, reconfirming the current uptrend.

Technical Analysis:
The long bond closed moderately higher today, reconfirming the current uptrend from late December. Technical indicators are neutral to slightly bullish as continued strength in momentum and oscillators is offset by a slight negative divergence between price action and the aforementioned indicators. MACD momentum is trending higher in positive territory, MACD histograms are drifting up to recent highs in positive territory and RSI is drifting up toward overbought territory.

Outlook:
A close above the recent high near 122.80 would reconfirm the current uptrend and forecast additional gains, while a close below uptrend channel support near 120.20 would suggest a test of nearby congestion support in the 118 area. Both scenarios are equally likely at the moment.

Currencies

Synopsis:
The US dollar index closed near unchanged today, holding near downtrend resistance.

Technical Analysis:
The US dollar index closed near unchanged today, holding near resistance at the upper boundary of the intermediate-term downtrend from the middle of December. Technical indicators remain neutral as MACD momentum turns up just below the 0 level, MACD histograms hold near the 0 level and RSI holds 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 recent lows at 75.60 would forecast a test of the long-term low near 75. Both scenarios remain equally likely.

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 lower today, consolidating recent gains.

Technical Analysis:
The GCI closed slightly lower today as it continues to consolidate recent gains of the uptrend from mid December. Technical indicators are neutral to slightly bullish as MACD momentum drifts down to new lows in positive territory, MACD histograms drift down into negative territory and RSI holds near recent lows just below overbought territory.

Outlook:
A breakout above the recent high near 21.90 would reconfirm the current uptrend and forecast substantial additional gains, while a close below congestion support near 21 would suggest a test of uptrend channel support in the 20.50 area. Both scenarios are equally likely at the moment.

Synopsis:
The Gold Miners index closed moderately lower today, continuing to test uptrend support.

Technical Analysis:
The Gold Miners index closed moderately lower today as it continues to test support at the lower boundary of the intermediate-term uptrend from mid December. Technical indicators are essentially neutral as MACD momentum trends down to new lows in positive territory, MACD histograms trend down to new lows in negative territory and RSI holds support at the 50 level.

Outlook:
A close well above congestion support near 1,375 would confirm a new short-term uptrend and forecast a test of recent long-term highs near 1,475, while a close below uptrend channel support at current levels would predict a return to congestion support in the 1,250 area. Both scenarios are equally likely.

Category: Forecasts, Short-term Forecasts


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