Thursday, June 3, 2010

Nasdaq looks pretty good but...

Not too much action today, bulls continue to consolidate their position but they still have to overcome some very important resistance levels ahead, particularly SMA200 (1,105) and a nasty downtrend line around 1110 right now. These levels should not to be taken literally (why SMA200 is important and not SMA205?) so I would say let's see S&P above 1,120 before going long.
Once again the Qs look better than both DOW and S&P. They managed to go above the downtrend line, 5 day SMA is flat now and EMA50 crossed EMA100 for the first time since they gave the sell signal on May 4th. This is pretty bullish to me. I need to see 5 day MA pointing up and a confirmation from daily DMA to confirm the uptrend. If this happens I am sure DOW and S&P will follow.

Please notice that SPX chart is on daily and QQQQ is on 30 minutes.

Gold had a nice run since April but starts showing signs of fatigue. As you notice there both an uptrend support line and a downtrend resistance line. I don't particularly like to see this pattern in a stock I own since the break out from the pattern is usually violent. It can break either on the upside or the downside but from my experience, most of the time breaks out against the current trend. You can better see the loss of momentum in the Directional Movement Index (DMI) on the lower panel. DMI turned green on April (cyan arrow) had a nice ride and reached a maximum value on May 12 but now DI+ is almost about to slip bellow DI-. It turned a little bit negative on May21 but it managed to recover and went positive again. I don't see this as a sell signal but as a warning signal. I do expect gold to go a little bit lower, towards the support line at 116.5 then possible another jump towards the resistance line before getting out of the triangle.

All the best!


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