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Markets Review for July 23, 2008 – Indecision Candle on the INDU, Gold/Oil Short-Term Oversold

Looking at the short term chart of the INDU I see a candle that starting to show some indecision. The index is also above the short-term regression downtrend channel which is usually bearish.

Gold – oh my! Gold took continued to take some serious beating today.

Despite this morning’s effort to go up it closed with a bearish candle again and is now very short-term oversold, below the regression channel.

The following is the weekly chart of Gold – when looking at this chart the current pullback is a small and healthy consolidation (although my account is currently hurting):

GoldCorp and other mining stocks

The stock has been dropping for the last 3 days but with lower volume (which is not helping at this point). The next few days will be key. A lower low will force me to sell and get back at a later date.

Crude Oil – also short-term oversold. Note how Crude is below both regression channels. I believe a bounce is due soon.

Weekly chart for Crude Oil – the recent consolidation also looks health for Oil when looking at the weekly time-frame.

Financials (XLF) – Although the financials have put a nice show lately, a quick look at the Weekly chart reminds us where it is and where it has been…. the direction is still DOWN!

XLF – daily chart

XLF – weekly chart

Good luck to you tomorrow.

Markets Review - July 22, 2008

Stock Markets - short term overbought, short term bullish

• INDU is short term oversold but could continue to the 11,800 level.
• Today was a bulish candle but on low volume, a break of today’s low could take the index back to 11,000.

The weekly chart below still shows the index is oversold, or below the regression line.

Gold - short term oversold, short-term bearish

Gold was up sharply this morning but then reversed and closed around the 948 area.

Oil - could continue descent and test $120 level

Although oil is oversold on the daily time frame it still has some room to consolidate on the weekly chart and could test the $120 level.

US Dollar - bullish bias

Looking at the weekly chart of the US Dollar Index below it looks as it’s trying to gain some strength and if it closes above the current flag it could attack the $75 barrier (upper channel). Any action above that point will likely be short-lived.

Euro - neutral

Weekly chart shows a slight break of consolidation.

Canadian Dollar - trading in a range

Responding to a reader’s e-mail

I have received an email from a reader which made me upset, he was basically saying that I just make calls and I don’t really trade anything, especially Gold. So, Jonathan, here’s a snapshot of one my broker statements and some trades on Goldcorp,. There’s an expression in Brazilian Portuguese which says “mate a cobra e mostre o pau”.

Disclaimer: Jonathan, these are short term trades and trading is a very risky business.

Market Review for 07/22/2008

Today I will look at the Dow Jones industrial using my favorite channel indicator, the linear regression channel.

Looking at the daily chart of the $INDU below it has bounced back from an overextended state (below thick red line) to a short-term overbought (above blue line). I’m not in the business of predicting here but if today’s high is taken out over the next few days it could go to the 11,900-12,000 area. If otherwise it drops below 11,200 it could retest the 11,000 area.

Looking at the weekly chart below, the index is still oversold (below the long term regression channel). Again, it could potentially bounce back to the 12,000 level “if” today’s high is taken over the next few days.

Gold – Where’s gold at?

Looking at the short-term chart of the Gold Contract below it looks as the metal is still well positioned.

This next chart is a 180 minutes chart. Note at how it has started pushing to the upside since yesterday and it has broken the consolidation channel today.

Finally, the weekly chart. A bullish flag, bounced from the middle regression channel line and is now close to 1,000.