A 4 chart sampling below and the Bottom Line taken from the comment plus 40 Charts Don Vialoux analyses in this great Monday comment. Read it all HERE
The S&P 500 Index fell 7.10 points (0.66%) last week. Intermediate trend remains down. Resistance is at 1,129.24. Support is at 1,010.91. Short term momentum indicators are oversold, but continue to trend lower.
The TSX Composite Index added 157.65 points (0.98%) last week. Intermediate trend remains down. Support is at 11,065.53. Resistance is at 12,077.01. The Index once again moved above its 50 and 200 day moving average. Short term momentum indicators recovered to a neutral level. Strength relative to the S&P 500 Index has turned positive.
The U.S. Dollar Index slipped 0.14 last week. It found resistance near its 50 day moving average. Support is at 80.08. Resistance exists in a band above 85.03. Short term momentum indicators are overbought, but have yet to show signs of peaking.
Gold added another $10.20 U.S. per ounce last week. Gold is testing its all time at $1,265.00. Short term momentum indicators are overbought, but have yet to show signs of peaking. A break above resistance implies technical upside to $1,384. ‘Tis the season for gold and gold equities to move higher!
Short term momentum indicators are oversold, but showed possibilities of a short term recovery on Friday. Their oversold level appears at a time in the month (last three days of the trading month and first two trading days of the next month) when equity markets usually move higher.
On the other hand, medium term technical indicators continue to trend lower and economic news (particularly in anticipation of the employment report on Friday) will show a continuing slow down in economic growth.
According to Thackray’s 2010 Investor’s Guide, the month of September is the weakest month of the year. U.S. equity markets historically have advanced until just after Labour Day followed by persistent declines. Additional comments and data on this phenomenon will appear in tomorrow’s Tech Talk.
U.S. equity markets have a consistent history during midterm election years of moving lower in the month of September.
The Bottom Line
A brief recovery by equity markets early this week from an oversold level would not be a surprise. However, the gains (if they occur) are not sustainable. Equity markets need a period of base building before they can launch a significant intermediate upside move. Please be patient. Meanwhile, hang on to seasonal trades in gold, agriculture and biotech.
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