Short-term Forecast for March 12, 2009

| March 12, 2009

Synopsis:
The S&P 500 index closed sharply higher today, reconfirming the uptrend from the beginning of the week and beginning a test of congestion resistance at the 750 level.

Technical Analysis:
Technical indicators are moderately bullish as price action trends up to the middle of the Bollinger bands, money flow trends sharply higher in negative territory, MACD momentum trends higher in negative territory, MACD histograms trend up into positive territory and RSI trends up toward the 50 level.

Outlook:
A close well above current levels would reconfirm the new uptrend and forecast substantial additional gains, while a reversal and close below recent lows near 680 would reconfirm the long-term downtrend and forecast additional losses. The uptrend continuation scenario remains very highly likely (90% probable).

Treasuries

Synopsis:
The 30-year bond closed slightly higher today, holding near the middle of a recent trading range.

Technical Analysis:
Technical indicators are neutral to slightly bullish as price action holds near the middle of flat Bollinger bands, MACD momentum drifts up to a new high in negative territory, MACD histograms hold near recent highs in positive territory and RSI moves back up to the 50 level.

Outlook:
A close above congestion resistance at 129 would predict a test of congestion resistance in the 132.50 area, while a break below the recent low at 125 would reconfirm the downtrend and forecast a return to congestion support in the 122.50 area. Both scenarios remain equally likely.

Currencies

Synopsis:
The US dollar index closed slightly lower today, approaching support at the lower boundary of the uptrend from December.

Technical Analysis:
Technical indicators are slightly bearish as price action moves down into the lower Bollinger band, MACD momentum moves lower in positive territory, MACD histograms trend down further into negative territory and RSI holds at recent lows near the 50 level.

Outlook:
A close well above recent highs near 89 would reconfirm the long-term uptrend and forecast additional gains, while a close below uptrend support near 87 would reconfirm the new downtrend and forecast additional losses. The downtrend continuation scenario is now slightly more likely (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 slightly higher today, consolidating recent losses of the downtrend from February.

Technical Analysis:
Technical indicators are neutral to slightly bearish as price action moves higher in the lower Bollinger band, MACD momentum holds near recent lows in positive territory, MACD histograms react off of recent lows in negative territory and RSI holds near the 50 level.

Outlook:
A close above new congestion resistance near 25.25 would forecast another test of the recent all-time high at 26.70, while a close below uptrend support near 23.30 would reconfirm the downtrend from last month and predict a return to congestion support near 22.25. Both scenarios are equally likely.

Energy

Synopsis:
Oil closed sharply higher today, reconfirming the uptrend from February and approaching resistance at the upper boundary of the recent trading range.

Technical Analysis:
Technical indicators are moderately bullish as price action moves up to the top of the Bollinger bands, MACD momentum drifts up to a new high in positive territory, MACD histograms hold near recent highs in positive territory and RSI moves up to recent highs in positive territory.

Outlook:
A close well above resistance at the top of the trading range near $50 would reconfirm the uptrend from February and forecast substantial additional gains, while a close below uptrend support near $45 would predict another test of the lower boundary of the trading range at $40. The uptrend continuation scenario is more likely (70% probable).

Category: Forecasts, Short-term Forecasts


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