Thursday, August 18, 2011

Adam Hewison: The Trend is Your Friend – How True Those Words are Today!


We have been on the right side of the markets for quite some time now.  It is in times like these when technical analysis really shines.  It doesn’t matter if you have a strong upward trend in gold or a downward spiraling trend in stocks, technical analysis works.
We feel we have a target rich area for trading opportunities right now.  Some of the best money can be made during periods just like this.  A key to being successful in markets that are having large moves is to be disciplined and follow MarketClub’s Trade Triangles.
So let’s go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011. 
S&P 500
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
Today’s action in the S&P 500 is a further reinforcement of the downward trend that has been in place for quite some time.  As we said in yesterday’s comments, you must remember that the major trend is down for the equity markets and strong rallies represent shorting opportunities.  Looking at the weekly charts, a close at current levels would be extremely negative.  The lowest close we have seen on the S&P500 this year is 1119.46.  This is another level to watch carefully.  We see this market going lower.

SILVER
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 75
Consider these words of wisdom… Do not buy silver because you think it is cheap in comparison to gold.  The market continues to be in a broad trading range without a clear-cut trend at this time. Intermediate term traders should be on the sidelines and out of silver.  A Chart Analysis Score of + 75 indicates a two-way market and a trading range.  Let us be patient and wait for our Trade Triangles to kick in and give us a solid signal.

GOLD
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Positive
Daily Trade Triangles for Short Term Trends                     = Positive
Combined Strength of Trend Score                                    = + 100
The gold market moved to new highs today taking out the previous high of $1814.41. This last surge in gold was caused by a panicky situation in Europe, especially with the European banks.  Uncertainty over bank stocks pushed many of the European banks and the US banks to the downside today.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.

CRUDE OIL 
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
$88.32 was a 50% Fibonacci retracement area, and this level was hit yesterday.  It was enough to stop this market on the upside.  As you know, we have been bearish on crude oil from the weekly Trade Triangle on August 1st at $94.02 a barrel.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.  The longer term trend for crude oil is down based on our Trade Triangle technology.

DOLLAR INDEX
Monthly Trade Triangles for Long Term Trends                = Positive
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 60
Our comments today remain pretty much the same as they were yesterday, as there has been very little directional change in this market.  The 73.50 level continues to act as support for the dollar index. This market has remained in a fairly well defined trading range for the last several months. With a Chart Analysis Score of -60 we would want to approach this market using our Donchian Trading Channels as well as our Williams %R indicator.  The index remains below its 200 day moving average, while our longer-term Trade Triangle remains positive.
REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long Term Trends                = Negative
Weekly Trade Triangles for Intermediate Term Trends    = Negative
Daily Trade Triangles for Short Term Trends                     = Negative
Combined Strength of Trend Score                                    = – 100
The Reuters/Jefferies CRB commodity index has turned back from the Fibonacci retracement level of 50% at 332.95.   This level was hit yesterday.  While our bias is towards inflation, the index is currently indicating that we are in more of a deflationary scenario.  We want to remain patient and let our Trade Triangles signal when this market has made a trend change to the upside.  Long Term, intermediate and short term traders should hang on for the ride and protect profits with money management stops.


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As always, we rely on our market proven Trade Triangle technology for catching the big moves.

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