Is America Planning on Rescuing Europe Again?

Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Friday, the 16th of September.

Seventy years ago, the United States went over to Europe to save Europe from an imminent Nazi invasion. It was a different world back then and America was a different country. At that time, America was a strong growing nation having just come out of the depression years.

Here we are seventy years later, once again going over to save Europe. Let me rephrase that, Timmy Geithner is going to help save Europe again. Somehow, I just don't buy it.

The EuroZone is in deep, deep financial trouble.  America is not the America of the past, when it was the driving force of the world's economy. That was when people used to work hard and we made things in America. American's used to be able to save money.

 

How can we possibly help Europe, when we need a lifeline ourselves?! I believe the banks are still in serious trouble based on 3 key points.

(1) There is no transparency.

(2) There's a huge undisclosed bond debacle that hasn't been marked on the books of the banks in Europe.

(3) The banks in the US still have a huge mortgage and foreclosure problem, that they haven't fully owned up to.

Right now, the trend for the banks remains negative based on our long-term Trade Triangle Technology.

The equity markets in the US have rallied on this false assumption that everything is going to be okay. Granted, the stock market is made up of thousands of stocks and some stocks will be winners, while others will be losers. However, the general trend in the S&P 500 market, which we consider to be the most important index, remains negative.

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.
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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 = + 60

We expect the current euphoria over the past five days has run its course and we are going to see a correction from current levels. What is interesting in the S&P 500 index, is the fact that it makes a cycle high every 11 or 12 days. We expect this market to be on the defensive for the day and for most of next week. Long-term traders should continue to be short or be out of the market completely, and in a cash position. Intermediate term traders should be on the sidelines waiting for either a buy, or sell signal based on our Trade Triangle technology.

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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 = + 65

The rally that we were looking for in silver kicked in today, with the silver market rallying dramatically from yesterday's recent lows. This market is heavily oversold, similar to the conditions that existed around June 27th and again around August 5th. Both times the market had a strong rally in excess of $6 an ounce. If the same holds true, we can project that the silver market will possibly go up and test the recent highs of around $44 an ounce. The silver market continues to remain in a long term up trend. However, the short term daily Trade Triangle is in a negative position. With a Chart Analysis Score of + 65 it would appear that this market is still in a short-term trading range. We want to continue to monitor this market over the next few days, looking for an area to add to long positions. Intermediate and longer term traders should maintain long positions in this market with appropriate stops.

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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 = Negative
Combined Strength of Trend Score = + 65

The gold market is coming from a very heavily oversold condition, similar to the scenario that was seen in late June and early July. If that is the case, we could see a similar move which produced a $400 gain in gold in a matter of 8 weeks. During that time we went from a low of around $1,500 an ounce to just over $1,900 an ounce. If the same holds true we could in fact see gold move over the $2,000 an ounce level. With both our long-term and our intermediate term Triangles positive, we expect the longer-term trend to once again resume to the upside. With a Chart Analysis Score of + 65 it would appear that the gold market is in a near-term trading range. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. The Williams % R has just emerged from an oversold condition. The $1,840 level is resistance for gold at the moment. Support comes in around the $1,780 and extends all the way down to $1,750. Intermediate and long-term traders should maintain long positions with the appropriate 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 = Negative
Combined Strength of Trend Score = - 55

The crude oil market is practically unchanged for the week and is still presenting a mixed picture based on our Trade Triangle Technology. We do not think that the crude oil market is ready to go higher based on our long-term monthly Trade Triangle, which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.

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DOLLAR INDEX
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 pullback yesterday in this index into a previous resistance area of 76.10 was, in our opinion, a great opportunity to get long this market. Our next opportunity is going to be when our daily Trade Triangle turns green. An old adage of technical trading is that former resistance levels can become support levels. We think this is true in the case of the dollar index. Longer-term, this market looks poised to move much higher. This index is coming from a large energy field that is capable of carrying it much higher, possibly up to the 80.00 area.
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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 = - 75

As expected, this index pulled back to the 330 area. A move down to the 326 level would represent a 61.8% Fibonacci retracement. We expect that this level will be tested. This index is now in an oversold condition and we expect that if it gets down to the 326 level, it would be touching the lower level of the Donchian trading channel. Long-term traders should remain short this index. Intermediate and short term traders should be out of this 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 with my weekend wrap. Have a great trading day.

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