How's The Market Looking At The End Of August?

Updated with video from Adam at 5:08 PM EST

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Wednesday, the 31st of August.

Here we are at the end of August, and the markets for the most part are still true to their trends. One of my routines that I religiously practice at the end of every month, is to look at the monthly charts. I like to see just how the various markets are closing for the month. If you don't already do this, I highly recommend that you give it a try, as it gives you a great feel for the various trends in the markets.

Let's start with the S&P 500 and work our way down to the Reuters/Jefferies CRB Commodity Index.

The S&P 500 closed out the month of July at 1292.28. It appears as though it is going to close lower for the month of August, unless we see a monumental rally that pushes up this index 70 or 80 points for the day. I don't think there is a remote chance of that happening.

Silver closed out July at $39.47 and is currently higher for the month. The same holds true for gold, which closed out last month at $1,613. Despite today's early pull back, gold is still $200 higher for the month and maintaining its upward trend.

Crude oil is in a downward trend and closed out the month of July at $97.37 a barrel, basis the October contract. This market is currently trading around the $88.80 level which is about $8.50 lower on the month. The trend in crude oil continues.

The dollar index which has been going nowhere for several months, repeated its performance in August. This index is practically flat from its July close of 73.87. This market is currently trading at 73.95 with no clear cut trend happening here.

The Reuters/Jefferies CRB Commodity Index also closed flat for the month of August. At the end of July, this index stood at 342.03 and is currently trading around the 342.03 area.

Now, let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.

 

S&P 500
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

As we outlined in yesterdays report, we were looking for a move back to the 1230 level, at a 50% Fibonacci retracement. This level was hit this morning and we view it as a correction in a bear market and should be sold. For the month of August, the S&P 500 index is down from its July close of 1292.28. The next level of retracement is right around the 1250 level, which should represent major resistance for this market. We are heavily overbought on the Williams % R indicator and we would not be surprised to see this market roll over in the next week or two. Our Trade Triangles remain longer-term negative for this index. Intermediate term traders should be on the sidelines.

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SILVER (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trend = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 100

The silver market just moved in to a +100 Chart Analysis Score today, indicating that all of our Trade Triangles are in agreement with the upward trend. However, this market has been going sideways for the past several days as it regroups above the $41 level. Both of our intermediate and long term indicators are friendly to the silver market and we would not rule out further strength in the near-term. The Williams % R indicator is trading around - 50 and it is neither oversold nor overbought and remains neutral at this time.

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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

The gold market is managing to maintain its solid footing above the $1800 an ounce level. With all of our indicators showing a + 100 Chart Analysis Score, you should not rule out another challenge of the $1,900 area. One of the key levels to watch in the next few days is the $1,775 area. This level should provide support for this market. The gold market is in the mid-range of the Williams % R and therefore is not giving us any clues as to its next swing direction. We would imagine a move over $1,850 would be a very positive indicator for gold. Both intermediate and long-term traders should maintain long positions with money management stops in place.

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CRUDE OIL (OCTOBER)
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 October crude oil contract reversed from the 89.19 level. This market is also at the top of its Donchian Trading Channel and is in a heavily overbought technical formation. We would not be surprised to see a pullback from current levels. At the present time, our long-term indicator is negative and our short term weekly Trade Triangle is positive, sending a mixed picture for crude oil. However, the longer-term monthly Trade Triangle must be given more weight than either the daily or weekly Trade Triangles.

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

At the present time this index "is like watching paint dry." Very little movement in this index since May, and for the month of August this index is practically flat. With a Chart Analysis Score of - 60 we would want to trade this market using our Donchian Trading Channels and our Williams %R indicator. The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.

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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 = Positive
Combined Strength of Trend Score = + 70

This index is lower for the month and also at the upper ranges of the Donchian Trading Channel. The index is heavily overbought at these levels. We would not be surprised to see some profit-taking coming in to this market and a pullback from current levels. Our bias is towards inflation in the future, but we are expecting to see more of a two-way market in this index in the next week or so. Intermediate and short term traders should be out of the market and on the sidelines at the present time.

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As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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This is Adam Hewison for MarketClub and I'll see you tomorrow, right here at 1pm. Have a great trading day.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub