Tuesday, October 19, 2010

Stock Market and Commodities Commentary For Tuesday Evening Oct. 19th

The U.S. stock indexes closed solidly lower today and were pressured by profit taking from recent gains and on news that Bank of America is in some trouble with its mortgage financing. The stock index bulls still have the overall near term technical advantage as price uptrends are still in place on the daily bar charts. Stock index bulls have been very pleased with price action so far this autumn a time which is normally not favorable to market bulls. My bias is that prices will trade mostly sideways, but with a slight upside bias, into the end of the year.

Crude oil closed down $3.44 at $79.64 a barrel today. Prices closed near the session low today and hit a fresh three week low. Chart damage was inflicted today as prices saw a bearish downside "breakout" from a sideways trading range at higher price levels. Sharp gains in the U.S. dollar index and lower stock index future prices today pressured crude.

Natural gas closed up 8.8 cents at $3.519 today. Prices closed near the session high today and saw short covering in a bear market. Prices hit a fresh contract low early on today. The bears still have the solid overall near term technical advantage.

Gold futures closed down $35.20 at $1,337.00 today. Prices today hit a fresh two week low, closed near the session low and were pressured by sharp gains in the U.S. dollar index. Profit taking and long liquidation were featured in gold today, and no serious chart damage occurred. However, good follow through selling pressure on Wednesday would likely produce some near term technical damage to begin to suggest that a near term market top is in place. Bulls are hoping bargain hunters once again step in to buy weakness in the gold market.

The U.S. dollar index closed up 138 points at 78.52 today. Prices closed near the session high today and hit a fresh two week high. News that China raised a key interest rate today boosted the greenback. Dollar index bears still have the overall near term technical advantage, but the bulls did gain fresh upside momentum today to suggest that a market low is in place.

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