Hello traders everywhere! Adam Hewison here, President of INO.com and co-creator of MarketClub, with your video update for Wednesday, the 26th of March.
It would appear as though most of the major indices have just been spinning their wheels and going nowhere fast in the past 4 to 5 weeks as they have all been in a broad trading range. This type of market action can lull investors to complacency, but for me it has always been a wake-up call to pay close attention to the market as something big is going to happen.
As I see it, the market is doing one of two things, it's either building a base to move higher or it's a distribution top – only time will tell which is the correct answer.
One of our members suggested that the Dow 30 could be making an inverse head and shoulders formation. Certainly this is possible, but I need to see a clear breakout to the upside to confirm this formation.
The other concern I have is the damage done to the NASDAQ earlier this week as it fell to a 6-week low. How this particular index closes on Friday is going to be very important in my mind. Again, I will be watching this market very closely for signs of either a continuation of the bullish trend or a top.
Out of the three indices I follow, the S&P 500 with a + 85 Score is exhibiting the strongest upward trend. Following the S&P 500 is the NASDAQ and the DOW and not necessarily in that order, as they both appear to be fighting technical problems. The DOW is exhibiting a monthly red Trade Triangle, indicating longer term weakness, while the NASDAQ flashed a weekly red Trade Triangle this week indicating a sidelines position in this index.
With the weekly and daily Trade Triangles negative, I expect gold to continue to be on the defensive. Longer-term however, I still remain positive since the long-term monthly Trade Triangle is still green. Look for gold to find Fibonacci support between the $1,290 and $1,266, basis spot gold. I expect to see psychological support come into the gold market around the $1,300 level. If gold is to move higher later in the year, it's going to have to repair some of the technical damage that has been inflicted in the past two weeks. Look for more sideways to lower action in this precious metal for the next few weeks.
At this particular time, I still prefer the Euro over the Dollar despite the pullback from the 1.3960 area. Look for Fibonacci support to come into this pair at the 1.3721 level and also at the 61.8% Fibonacci support level at 1.366. There may be several more weeks of sideways action before the Euro reasserts itself and starts moving higher to the 1.4200 target zone. With a Score of -70, we are stuck in the fringes of a trading range at the moment. The best types of technical tools to use in a trading range are oscillators such as the Williams %R and the RSI indicator.
While there has been a sharp pullback from the $104 a barrel crude oil prices, the market appears to have found support right around $97 which is just between the Fibonacci support levels of $97.94 and $96.38. With the Chart Analysis Score a +55, I expect this particular commodity to be in a trading range in the short term. Look for support around the $98 to $97 level and resistance coming in around $100 to $102 area, basis the May crude oil (E) contract (CL.K14.E).
Every success with MarketClub,
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