The Bottom Line
Technical, fundamental and seasonal influences point to another volatile period for equity markets around the world this week, but with less intensity than recorded last week. A bounce from above lows set on August 8th at 1101.54 for the S&P 500 Index, 10,604.07 by the Dow Jones Industrial Average and 11,617.81 for the TSX Composite Index is a most likely scenario. A break below these levels is less likely, but is possible. A break below support, given the substantially oversold level of equity markets and most sectors, suggests minor short term weakness below support. Preferred strategy is to hold/add to sectors that benefit from favourable seasonal influences at this time of year (e.g. gold equities, agriculture, “gassy” equities) and to watch for entry points on weakness in other economically sensitive sectors in October.

The S&P 500 Index plunged 55.28 points (4.69%) last week. Intermediate trend is down. Loss since the beginning of July is 17.12%. The Index remains well below its 50 and 200 day moving averages. Short term momentum indicators are recovering from deeply oversold levels despite the drop last week. Support is trying to form at 1,101.54.

The TSX Composite Index lost 534.73 points (4.26%) last week. Intermediate trend is down. Loss since the third week in July is 11.16%. The Index trades well below its 50 and 200 day moving averages. Support is trying to form at 11,617.81. Short term momentum indicators are recovering from oversold levels. Strength relative to the S&P 500 Index has turned sharply positive.

The U.S. Dollar eased 0.60 last week. It remains in a six month trading range between 72.70 and 76.72. Short term momentum indicators are neutral to slightly oversold. Intermediate trend remains down.

Crude oil fell $2.41 per barrel (2.83%) last week. Intermediate trend is down. Its 50 day moving average recently fell below its 200 day moving average. Short term momentum indicators are recovering from oversold levels. Support is trying to form at $75.71.

Gold gained another $106.20 per ounce (6.07%) last week to another all time high. Short term momentum indicators remain overbought, but have yet to show signs of peaking. Gold equities showed early signs last week of outperforming gold.

… be sure to check out the other 48 Charts including Seasonal Charts and articles Don posted this morning August 15th HERE