Hello MarketClub members everywhere. It's Friday and a lot is going on in the markets. I believe that the sharp rally in the indices will fizzle out in the next five days and they will move into a trading range before heading lower.
The reason I say that is because all three major indices are in what I call "thin air". What that means is that they are all above their 50% Fibonacci retracement levels and close to their 61.8% major resistance areas.
Here are the areas for the DOW, NASDAQ and the S&P 500.
DOW (INDEX:DJI) = A 50% Fibonacci retracement comes in around 16,750, a 61.8% retracement comes in around the 17,040 area
NASDAQ (NASDAQ:COMP) = A 50% Fibonacci retracement comes in around 4,700, a 61.8% retracement comes in around the 4,818 area
S&P 500 (CME:SP500) = A 50% Fibonacci retracement comes in around 1,970, a 61.8% retracement comes in around the 2,001 area
The Fibonacci retracement levels were measured from both a close-only and a high low measurement and have been averaged out. All of the indices may go higher. However, the indices are in areas where they will begin to have problems before returning to the general downtrend that I see coming.
Crude Oil
Based on the Trade Triangle technology, crude oil (NYMEX:CL.J16.E) is now in an uptrend and has put in a bottom. It would appear as though there is potential for a double bottom which will be confirmed with a move and close over the $36.00 level. When that happens, I would expect crude to move to the $38-$40 level where it will run into a long-term downtrend line that should halt its upward momentum. Watch oil very closely today for a close over the $36.00 level.
Gold
The gold (FOREX:XAUUSDO) market broke out of the Triangle continuation pattern I showed in my last video. Look for gold to have resistance at the $1300 level from January 22, 2015. The bigger picture also portends to this market moving still higher with Fibonacci retracement patterns indicating the potential of seeing a 50% retracement of around $1482 an ounce. A 61.8% Fibonacci retracement would take spot gold up to $1582 an ounce.
Like the indices, the Fibonacci retracement levels for gold have been measured from both a close-only and a high low measurement and have been averaged out.
Watch gold closely today as it could be a great 52-week high on a Friday trade. Here are the only 3 rules you need to trade "52-week New Highs on a Friday".
RULE #1: When gold hits a new 52-week high on a Friday and closes at or close to its high for the day, go home long gold for the weekend.
RULE #2: Exit this your long gold position on the opening the following Tuesday.
RULE #3: If gold opens sharply lower on Monday, exit this position immediately.
Stay focused and disciplined.
Every success with MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub
Interesting. While you show fib retracements to validate your predictions. Fib queen Carolyn Boroden predicted all time highs in the averages. Let's see who will be right. I am with the fib queen for short term.
So your whole reason for this coming to an end is Fibonacci levels? That's it? You rely on only one indicator? Perhaps providing a few examples of your thin air theory would go a far way. I'm not going to take sides just yet, this battle is only beginning. I do see the spooz getting back up to the 2050 level before another major downtrend.
EDIT to clarify my somewhat botched initial phrase, this should read:
I agree with @Adam Hewison on the short-term likelihood of this rally coming to an end. The fundamentals quoted by @Rasesh Shukla for "why not to expect any major Bull" are quite different though.
Dow Gold or Crude, take current rally just as a Technical Bounce Backs.
Considering Financial and Economical crisis world wide, how and why can we expect any major Bull face or turn around? such relief rallies are quite illusive and so even more dangerous then Bear face too.
If you don't want to prefer "Shorts" ok, then keep away from market, however not attract from up-trend, and don't even try to cover some small earnings from "Longs"
While I agree with @Adam Hewison on the short-term likelihood of this rally coming to an end, the fundamentals quoted for "why not to expect any major Bull" are quite different.
That economic crisis is, in fact, "only" financial-crisis-induced and, therefore, nothing more than a by-product of reckless "fiscal policy" or rather the overall currency shenanigans going as far back as 1971 (if not, indeed, 1913 or earlier). If these would de-leverage only partly, the resulting deflationary and short-term effects on Gold would, quite in line with @Rasesh Shukla's comment, be bearish for precious metals (beyond that, for all other commodities) and prices in general. At the same time, this would be beneficial for the US dollar. Both effects would not last long though, and would eventually lead to the continuation of Gold's bull market (that we are still in as of this writing, albeit a long gear-market interlude since 2011). Just look at supply-and-demand figures along with global gold movements into the vaults of China and other forward-thinking planners, and it will become obvious that gold prices will have to go higher long therm simply because of the laws of supply and demand.
belated thanks for so kind words of reply...quite interesting, however, it's batter to wait for some more.