Tuesday, November 23, 2010

North Korean Military Action Pressures U.S. Markets, Sends Gold and Dollar Sharply Higher

The S&P 500 index closed lower due to profit taking and a stronger U.S. Dollar led mostly by North Korean artillery fire, consolidating some of last week's short covering rally. The low range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are neutral to bullish signaling that a short term low might be in or is near. Closes above Monday's high crossing at 1206.00 would temper the near term bearish outlook. If December renews the decline off last week's high, the 25% retracement level of the July-November rally crossing at 1169.37 is the next downside target. First resistance is Monday's high crossing at 1206.00. Second resistance is this month's high crossing at 1224.50. First support is last Tuesday's low crossing at 1175.20. Second support is the 25% retracement level of the July-November rally crossing at 1169.37.

Crude oil closed lower on Tuesday but remains above the 50% retracement level of the August-November rally crossing at 81.14. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If January extends the decline off last week's high, the 62% retracement level of the August-November rally crossing at 79.24 is the next downside target. Closes above the 20 day moving average crossing at 84.47 are needed to confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 83.85 Second resistance is the 20 day moving average crossing at 84.47. First support is today's low crossing at 80.28. Second support is the 62% retracement level of the August-November rally crossing at 79.24.

Natural gas closed lower due to profit taking on Tuesday as it consolidates some of the rally off last week's low. Stochastics and the RSI remain bullish signaling that sideways to higher prices are possible near term. If December extends the rally off October's low, the 38% retracement level of the June-October decline crossing at 4.362 is the next upside target. Closes below the 20 day moving average crossing at 3.973 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 4.290. Second resistance is the 38% retracement level of the June-October decline crossing at 4.362. First support is the 10 day moving average crossing at 4.015. Second support is the 20 day moving average crossing at 3.973.

Gold closed higher on Tuesday and above the 10 day moving average crossing at 1365.10 signaling that a short term low has been posted. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are turning bullish signaling that sideways to higher prices are possible near term. If December extends the rally off last week's low, the reaction high crossing at 1388.10 is the next upside target. If December renews this month's decline, the reaction low crossing at 1315.60 is the next downside target. First resistance is today's high crossing at 1382.90. Second resistance is the reaction high crossing at 1388.10. First support is last Tuesday's low crossing at 1329.00. Second support is the reaction low crossing at 1315.60.

The U.S. Dollar closed sharply higher due to world economic concerns on Tuesday and at the same time renewing this month's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought, diverging but are turning neutral to bullish again signaling that sideways to higher prices are possible near term. If December extends this month's rally, the 38% retracement level of this year's decline crossing at 80.54 is the next upside target. Closes below the 20 day moving average crossing at 77.96 would confirm that a short term top has been posted. First resistance is today's high crossing at 79.83. Second resistance is the 38% retracement level of this year's decline crossing at 80.54. First support is the 20 day moving average crossing at 77.96. Second support is this month's low crossing at 75.24.


Crude Oil - The New World Currency

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