Short-term Forecast for March 5, 2009

| March 5, 2009

Synopsis:
The S&P 500 index closed sharply lower today on massive volume yet again, reconfirming the long-term downtrend. The market crash that began last September continues to drive stocks down to historically oversold levels.

Technical Analysis:
Technical indicators are moderately bearish as price action trends lower near the bottom of falling Bollinger bands, money flow drifts down at new lows in negative territory, MACD momentum trends down to a new low in negative territory, MACD histograms hold near recent lows in negative territory and RSI holds near the oversold level.

Outlook:
A large intraday rally on massive volume would very likely signal the start of a bear market rally, while a close below current levels would reconfirm the long-term downtrend and forecast additional losses. The downtrend continuation scenario remains more likely at the moment (70% probable).

Treasuries

Synopsis:
The 30-year bond closed sharply higher today, breaking well above resistance at the upper boundary of the downtrend from December.

Technical Analysis:
Technical indicators are neutral to slightly bullish as price action jumps up into the upper Bollinger band, MACD momentum turns higher near recent highs in negative territory, MACD histograms move back up into positive territory and RSI moves up to the 50 level.

Outlook:
A close above congestion resistance at current levels would predict a test of congestion resistance in the 132.50 area, while a reversal and move below the recent low at 125 would reconfirm the downtrend and forecast a return to congestion support in the 122.50 area. Both scenarios are equally likely.

Currencies

Synopsis:
The US dollar index closed slightly higher today, continuing to hold at the recent long-term high near 89.

Technical Analysis:
Technical indicators are now neutral to slightly bullish as price action holds in the upper Bollinger band, MACD momentum holds near recent highs in positive territory, MACD histograms hold just above the 0 level and RSI drifts up toward recent highs in positive territory.

Outlook:
A close well above current levels would reconfirm the long-term uptrend and forecast additional gains, while a move back below 88 would predict a test of uptrend support near 86.40. The uptrend continuation scenario is slightly more likely at the moment (60% probable).

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 near moderately higher today, consolidating recent losses of the downtrend from last month.

Technical Analysis:
Technical indicators are slightly bearish as price action moves back up to the middle of the Bollinger bands, MACD momentum trends down to a new low in positive territory, MACD histograms react off of recent lows in negative territory and RSI reacts off of recent lows at the 50 level.

Outlook:
A close above the recent all-time high at 26.70 would reconfirm the long-term uptrend and forecast additional gains, while a close below congestion support near 24.25 would reconfirm the short-term downtrend from last month and predict a test of intermediate-term uptrend support at 23. The correction scenario is slightly more likely (60% probable).

Energy

Synopsis:
Oil closed moderately lower today, consolidating recent gains of the short-term uptrend from February.

Technical Analysis:
Technical indicators are slightly bullish as price action holds in the upper Bollinger band, MACD momentum drifts up to a new high just above the 0 level, MACD histograms hold near recent highs in positive territory and RSI holds just above the 50 level.

Outlook:
A close above congestion resistance at $45 would reconfirm the short-term uptrend and forecast another test of resistance at the top of the trading range near $50, while a close below support at the lower boundary of the trading range near $42 would predict another test of the recent lows near $37. The uptrend continuation scenario is slightly more likely (60% probable).

Category: Forecasts, Short-term Forecasts


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