Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Dow Theory Major Stock Market Confirmation

Stock-Markets / Stock Markets 2010 Mar 19, 2010 - 05:33 AM GMT

By: Steve_Betts


Best Financial Markets Analysis ArticleJobless claims came in a little higher than expected while the change in the CPI was zero. Of course the financial news networks’ immediately went to work telling the world how this is not deflationary. At best it’s a thin argument and the statistics do not back it up. Yesterday the PPI came out at a negative 0.6% adding a little fuel to my deflationary argument. Also, the slowdown is not confined to the United States as the following text from a Bloomberg article points out:

Demand to haul cargoes has plunged because of the global recession, sending charter rates lower and spurring carriers to take vessels out of service. BW Gas Ltd., the world’s biggest shipper of liquefied petroleum gas, said last week it idled four tankers because rates plunged so low that each vessel was losing the company about $25,000 a day.

“There’s been an unparalleled collapse in demand,” said Harris, who was previously chairman of Clarkson Plc, the world’s largest shipbroker.

Yet we see that the Baltic Dry Index and the Transports have been on the rise for several months. This is one of the many contradictions we see in the market place and is related to the tremendous infusion of liquidity into the financial system. Distortions!

General comments aside, I want to discuss two things today: the major Dow Theory confirmation we experienced yesterday and gold. Yesterday the Dow closed higher by 47 points to end the session at 10,733 and that is eight points above the old closing high of 10,725 and a major Dow Theory confirmation. The Transports began to record a series of new closing highs early last week and the Dow failed to confirm the first five such closing highs, until yesterday that is. Today both indexes are again in positive territory and trying to close higher for the eight straight days. As you can see if the chart of the Transports below, it actually seems to be leading the  Dow higher and they both share one trait in common right now; RSI and MACD are both extremely overbought and it appears that the histogram has started to decline, indicating a top may be approaching.

I suppose I could make all sorts of comments about the absurdity of the Dow heading higher from here, blame intervention, and so on but the fact is that it will move higher although a modest correction may be close at hand. Once a reaction runs its course, then the question becomes how high is high. I look for the Dow to make a run up to strong resistance at 11,245 although we do have good resistance at the 10,817 level.

If the Dow could push past the 11,245 mark then there is absolutely nothing to stop it until it reaches 12,399. Given the fact that the Fed will not withdraw liquidity anytime soon, and the fact that big money has been on the sidelines for several months, I would not be surprised to see the Dow run as high as 12,339. That indicates to me that the Fed will continue to grease the wheels and that means that they are winning the battle against deflation, at least for the moment.

                                          SUPPORT                 RESISTANCE

DOW                                    10,633                            10,817
                                             10,334                            11,245
                                               9,706                            12,399

TRANSPORTS                     4,236                              4,685
                                               4,195                              4,844
                                               3,835                              5,111

Now let’s talk about gold as it will be one of the major beneficiaries of the rally in stocks. All the central banks will continue to print currency, probably at an increasing rate, and smart money will continue to view gold as the safe haven. Yesterday gold saw another test of the strong resistance at 1,136.70 and then sold off sharply to 1,118.00, only to come back to close at 1,125.00. Today the spot price is trading up 2.70 at 1,127.70 after overcoming some early selling and looks like it wants to go higher.

                                          SUPPORT                 RESISTANCE

SPOT GOLD                       1,090.10                         1,148.70
                                             1,077.60                         1,158.20
                                             1,048.90                         1,219.20

I have little doubt now that gold will first move through 1,137.60, then through 1,148.70, and then explode too much higher levels. Right now gold is range bound as you can see on the preceding chart, but the tertiary trend is still headed higher. The key will be a higher high above the upper band of resistance at 1,148.90 and then it is off to the races. Over the coming weeks I am looking for gold to test the 1,219.20 resistance and then move substantially higher. A lot of gold bugs have been chased out of the market expecting lower prices, and will be forced to pay up for the privilege of getting back into the market. Even though gold has moved above 1,000.00 the general public is still ignorant about the gold market. Once they pile in it will be impossible to stop this train.

By Steve Betts

Web site:

The Stock Market Barometer: Properly Applied Information Is Power

Through the utilization of our service you'll begin to grasp that the market is a forward looking instrument. You'll cease to be a prisoner of the past and you'll stop looking to the financial news networks for answers that aren't there. The end result is an improvement in your trading account. Subscribers will enjoy forward looking Daily Reports that are not fixated on yesterday's news, complete with daily, weekly, and monthly charts. In addition, you'll have a password that allows access to historical information that is updated daily. Read a sample of our work, subscribe, and your service will begin the very next day

© 2010 Copyright The Stock Market Barometer- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules