Intermediate-term Forecast for May 1, 2010

| May 1, 2010

Stock Chart Analysis

Synopsis:
The S&P 500 index closed moderately lower this week, retreating from recent highs of the uptrend from early 2009. The 1,210 to 1,250 range contains multiple long-term technical barriers, so it is likely that stocks will struggle in this area before forming a long-term top sometime over the next several months.

Technical Analysis:
Technical indicators are slightly bullish as price action retreats from recent highs near the top of the Bollinger bands, money flow holds near recent highs in positive territory, MACD momentum moves up toward recent highs in positive territory, MACD histograms retreat from recent highs in positive territory and RSI retreats from recent highs in overbought territory.

Outlook:
A weekly close above the recent high near 1,217 would reconfirm the long-term uptrend from early 2009 and forecast a move up to strong congestion resistance near 1,250, while a close below current levels would predict a move down to congestion support at the previous long-term high in the 1,150 area. Both scenarios are equally likely.

Synopsis:
The European Top 100 index closed sharply lower this week, moving down toward support at the lower boundary of the long-term uptrend from early 2009.

Technical Analysis:
Technical indicators are effectively neutral as price action moves down to the middle of the Bollinger bands, MACD momentum retreats from recent highs in positive territory, MACD histograms move down to the 0 level and RSI moves down toward the 50 level.

Outlook:
A weekly close above the recent high near 234 would reconfirm the long-term uptrend from early 2009 and forecast a move up to congestion resistance in the 240 area, while a close below uptrend support at 218 would predict a move down to the recent low near 206. Both scenarios are equally likely.

Synopsis:
The Hang Seng index closed slightly lower this week, moving down toward support at the lower boundary of the long-term uptrend from early 2009.

Technical Analysis:
Technical indicators remain effectively neutral as price action holds near the middle of the Bollinger bands, MACD momentum holds above recent lows near the 0 level, MACD histograms hold near the 0 level and RSI drifts down to the 50 level. A slight negative divergence between price action and both momentum and oscillators results in a slightly bearish condition overall.

Outlook:
A weekly close well above the previous long-term high near 22,500 would reconfirm the long-term uptrend from 2009 and forecast additional gains, while a close below uptrend support in the 20,500 area would suggest the start of a correction. Both scenarios remain equally likely.

Treasury Chart Analysis

Synopsis:
The 30-year bond yield closed moderately lower this week, breaking below support at the lower boundary of the uptrend from October and returning to resistance at the upper boundary of the long-term downtrend.

Technical Analysis:
Technical indicators are neutral to slightly bearish as yields move down into the lower Bollinger band, MACD momentum retreats from recent highs in positive territory, MACD histograms move down into negative territory and RSI moves down to the 50 level.

Outlook:
A weekly close above 4.80% would confirm the breakout above long-term downtrend resistance and forecast additional gains, while a close well below previous short-term lows near 4.50% would invalidate the recent breakout and predict additional losses. Both scenarios are equally likely.

Synopsis:
The 10-year note yield closed sharply lower this week, breaking below support at the lower boundary of the uptrend from late 2009 and returning to resistance at the upper boundary of the long-term downtrend.

Technical Analysis:
Technical indicators are effectively neutral as yields move down into the lower Bollinger band, MACD momentum retreats from recent highs in positive territory, MACD histograms drift down into negative territory and RSI moves down to the 50 level.

Outlook:
A close above the recent high near 4.00% would confirm the breakout above long-term downtrend resistance and forecast additional gains, while a close below current levels would predict a move down to congestion support near 3.50%. A move down to congestion support is slightly more likely (60% probable).

Currency Chart Analysis

Synopsis:
The US dollar index closed moderately higher this week, moving above recent highs of the uptrend from November.

Technical Analysis:
Technical indicators remain slightly bullish as price action moves up to a new high in the upper Bollinger band, MACD momentum drifts up to a new high in positive territory, MACD histograms hold at recent lows in positive territory and RSI moves up to recent highs in positive territory.

Outlook:
A weekly close well above current levels would reconfirm the uptrend from late 2009 and forecast additional gains, while a close below uptrend support at 80.70 would predict a move down to congestion support in the 79.50 area. The uptrend continuation scenario is slightly more likely (60% probable).

Synopsis:
The Euro index closed moderately lower this week, moving down to a new long-term low for the downtrend from late November.

Technical Analysis:
Technical indicators remain moderately bearish as price action moves down to a new low in the lower Bollinger band, MACD momentum drifts down to a new low in negative territory, MACD histograms hold at recent highs in negative territory and RSI drifts down toward recent lows at the oversold level.

Outlook:
A weekly close above downtrend resistance near current levels would forecast a move up to congestion resistance in the 135 area, while a close below current levels would reconfirm the downtrend from late November and predict additional losses. The downtrend continuation scenario is slightly more likely (60% probable).

Precious Metal Chart Analysis

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 higher this week, moving up to a new all-time high and confirming the recent long-term breakout.

Technical Analysis:
Technical indicators remain moderately bullish as price action moves up to a new high above the Bollinger bands, MACD momentum moves higher in positive territory, MACD histograms move up to a new high in positive territory and RSI moves higher in positive territory.

Outlook:
A weekly close above current levels would reconfirm the long-term uptrend and predict additional gains, while a quick reversal and close below new congestion support in the 28.40 area would call the recent breakout into question and forecast a move back down to congestion support near 26.70. The uptrend continuation scenario is more likely (70% probable).

Synopsis:
Gold in US dollars closed moderately higher this week, moving up to previous highs of the long-term uptrend.

Technical Analysis:
Technical indicators are moderately bullish as price action moves up to a new short-term high near the top of the Bollinger bands, MACD momentum moves higher above recent lows in positive territory, MACD histograms drift up into positive territory and RSI moves up to recent highs in positive territory.

Outlook:
A weekly close well above the previous all-time closing high near current levels would reconfirm the long-term uptrend and forecast additional gains, while a close below short-term uptrend support near $1,135 would predict a move down to congestion support in the $1,100 area. The long-term breakout scenario is slightly more likely (60% probable).

Commodity Chart Analysis

Synopsis:
The CRB index closed slightly lower this week, holding near congestion resistance at recent short-term highs. An ascending triangle formation is now developing, suggesting that a break above congestion resistance near current levels has become more likely.

Technical Analysis:
Technical indicators are neutral to slightly bullish as price action retreats from recent highs in the upper Bollinger band, MACD momentum holds near recent lows in positive territory, MACD histograms hold near the 0 level and RSI retreats from recent highs in positive territory.

Outlook:
A close above congestion resistance in the 280 area would predict a test of the long-term high near 294, while a close below short-term uptrend support at 276 would forecast a move back down to the recent low near 258. Both scenarios are equally likely.

Synopsis:
Oil closed near unchanged this week, continuing to hold near recent highs of the uptrend from early 2009.

Technical Analysis:
Technical indicators remain slightly bullish as price action holds at recent highs near the top of the Bollinger bands, MACD momentum holds near recent highs in positive territory, MACD histograms hold near the 0 level and RSI drifts up to recent highs in positive territory.

Outlook:
A weekly close well above strong congestion resistance in the $88 area would reconfirm the long-term uptrend and predict a move up to congestion resistance near $100, while a close below congestion support near $80 would forecast a move down to congestion support at $74. Both scenarios remain equally likely.

Category: Forecasts, Intermediate-term Forecasts


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