Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Monday, the 1st of August.
As we start off this first day of August and first trading day of the week the cat is out of the bag, and the market doesn't like what it sees. The S&P 500 is now trading below its 200 day moving average as of this writing, which indicates further weakness ahead.
The equity markets started out strong, as did crude oil and the dollar. All that has changed now when the manufacturing sector came out and said that things were slowing down quite dramatically. In fact new orders grew at their slowest pace in 2 years in July, with new orders contracting, it represents a troubling development for the economy and the stock market.
Viewers of this report will note that we have been very cautious on the stock market as we felt it was rolling over to the downside based on technical analysis. A close today below the 200 day moving average which comes in at 1285 will be viewed as a negative for the S&P 500.
At this point, the greatest fear is a potential downgrade by one of the rating agencies. Should that happen, more pressure will be put on this market. Many investors have become complacent and this is a real danger in my view. I think there's a major opportunity to make money in this market as I see the S&P 500 slipping to the 1265 level before any kind of bounce.
Now, let's go to the markets and see how we can protect and grow your money in 2011.
S&P 500
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 70
Technically, the S&P 500 is now trading below its 200 day moving average and for many technical traders this is a big negative. If we see the market close below the 1285 level, this will confirm a definitive break for this index. Support comes in to this index at the 1265 and again at 1250. That is the last vestiges of support for this index. Should these levels give way you will see a mass exodus out of all stocks.
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SILVER (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 85
The Silver market, like the Gold market, came under pressure early as a knee-jerk reaction to a possible debt ceiling settlement. The market has subsequently rallied and is now higher on the day as of this writing. The overbought condition that was in play a week ago has been relieved and this market could still move up and test the target zones we have identified. We are expecting this market to reach its highs towards the latter part of Q3 and early Q4. The intermediate target for silver based on the Fibonacci count of 61.8% is $42.98.
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GOLD (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 100
In early trading this market was around the $1,610 level and has subsequently rallied and is now higher on the day. This has to be a troubling occurrence for the administration as it is really a vote of no-confidence in the direction of the country. There appears to be good support coming in at the $1,610 level. We continue to like this market from the long side. We are looking for gold to move higher until the end of Q3 and possibly into Q4. Intermediate targets for gold are $1,640 and $1,650.
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CRUDE OIL (SEPTEMBER)
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 70
The crude oil market rallied dramatically, trading as high as $98.50 a barrel before it came under pressure and collapsed to be lower on the day. Our Trade Triangle technology continues to indicate a mixed picture and a trading range for this commodity. The Williams % R indicator is currently in an oversold condition and we are getting close to touching the lower part of the Donchian trading channel. Both of these indicators may represent some support around the $94 level.
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DOLLAR INDEX
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 60
The dollar index has rallied quite dramatically and is currently trading 0.70% higher for the day. We discussed in previous reports that this index encompasses a basket of currencies and is not representative of an individual currency. We further reported that the 73.50 area was an important level of support for this index. This proved to be accurate as the dollar index rallied from the lower levels of being oversold on the Williams% R indicator and the lower levels of the Donchian trading channel. The long-term 200 day moving average remains negative for this index. Resistance remains at 75.50 and support comes in today at 74.00.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 65
The Reuters/Jefferies CRB commodity index continues to move sideways and remains trapped in a broad trading range. We feel that this index is close to making a low for a potential reversal back to the upside. We would not get excited about being long this index until we see the 352 level broken to the upside. At the present time, our Trade Triangle technology is mixed. Resistance is between 349 and 350. Support comes in at 342.
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This is Adam Hewison for MarketClub and I'll see you tomorrow same place, same time, have a great day trading!
As always, we rely on our market proven Trade Triangle technology for catching the big moves.
Every success,
Adam Hewison
President of INO.com
Co-founder of MarketClub.com
Yesterdays price action was very significant for the medium/long term direction as it broke decisively through the neckline of the Head and shoulders pattern that I have been following.
Here is the updated chart....
http://financial-trader-online.tradersdaytrading.com/showthread.php/156-The-Insider-Trading-Forums-Weekly-Report-31-July-2011?p=1319&viewfull=1#post1319
Gold and silver remain choppy but bullish as investors use it as a flight to quality safe haven.
Ah, Hello
I think we already hit 1265 on the S&P
and were below 1250 intraday
So
Get up at 4am EST and see what the Asian and European markets are doing
that will give you a key to early tomorrow's trading
don't forget to use stops
if your not using stops to limit your losses you will NEVER, NEVER be a winning trader
Looks like you were right about the 1265!
I remember in 2007 when the markets began to show signs of weakness as well as in 2008 when the markets were being ripped apart, many people thought it couldn't get worse... but it did. Sure, opportunities will arise... but many investors will lose large portions of their capital unnecessarily.
Capital preservation, risk management, minimizing losses, maximizing returns... these are the mantras of successful investors over the long-term.
Has the Weekly SPX 500 formed a Head and Shoulders?
when dollar dumps market goes up you do the math !!
"...I think there’s a major opportunity to make money in this market..." My one word comment is, HOW ?
Hi Adam,
You say in your analysis above:
"I think there’s a major opportunity to make money in this market as I see the S&P 500 slipping to the 1265 level before any kind of bounce."
What do you mean by making money? By shorting the S&P? Or does your comment refer to the whole market? In which case, short the whole market? Or does it mean to wait until the 1265 level, then go in? The whole market?
Just what is the major opportunity you refer to and how do you intend to use it?
Thanks as usual,
Donn