Monday, October 25, 2010

Stock Market and Commodities Commentary For Monday Evening Oct. 25th

The December S&P 500 index closed higher on Monday and above the 87% retracement level of the April-July decline crossing at 1178.21. The low range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are overbought, diverging but are neutral to bullish signaling that additional short term gains are possible. If December extends the aforementioned rally, April's high crossing at 1203.00 is the next upside target. Closes below the 20 day moving average crossing at 1161.62 are needed to confirm that a short term top has been posted. First resistance is today's high crossing at 1193.00. Second resistance is April's high crossing at 1203.00. First support is the 10 day moving average crossing at 1174.62. Second support is the 20 day moving average crossing at 1161.62.

Crude oil closed higher on Monday as it consolidates some of the decline off this month's high. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. Closes below the reaction low crossing at 79.90 are needed to confirm that a short term top has been posted. Closes above the reaction high crossing at 84.80 are needed to confirm that a low has been posted. First resistance is last week's high crossing at 84.80. Second resistance is this month's high crossing at 85.08. First support last week's low crossing at 79.90. Second support is the August-September uptrend line crossing near 78.10.

Natural gas closed shortly higher on Monday due to short covering as it consolidated some of this year's decline. Stochastics and the RSI are oversold, and are turning neutral to bullish hinting that a low might be in or is near. Closes above the 20 day moving average crossing at 3.983 are needed to confirm that a short term low has been posted. If December extends this year's decline, weekly support crossing at 3.390 is the next downside target. First resistance is the 10 day moving average crossing at 3.877. Second resistance is the 20 day moving average crossing at 3.983. First support is today's low crossing at 3.500. Second support is weekly support crossing at 3.390.

Gold closed higher due to short covering on Monday as it consolidates some of this month's decline. The mid range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices is possible near term. If December extends this month's decline, the 25% retracement level of this year's rally crossing at 1303.50 is the next downside target. Closes above the 10 day moving average crossing at 1351.00 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 1351.00. Second resistance is this month's high crossing at 1388.10. First support is last Friday's low crossing at 1315.60. Second support is the 25% retracement level of this year's rally crossing at 1303.50.

The U.S. Dollar closed lower on Monday and the mid range close sets the stage for a steady opening on Tuesday. Stochastics and the RSI are bullish hinting that a short term low might be in or is near. Closes above the reaction high crossing at 78.61 are needed to confirm that a short term low has been posted. If December extends the decline off August's high, the November 2009 low on the weekly continuation chart crossing at 74.21 is the next downside target. First resistance is the 20 day moving average crossing at 77.85. Second resistance is the reaction high crossing at 78.61. First support is last Friday's low crossing at 75.85. Second support is the November 2009 low on the weekly continuation chart crossing at 74.21.


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