Yesterday Janet Yellen, the head of the Federal Reserve Board, did exactly what I expected her to do and that was nothing. As I have said many times, the Fed is out of bullets and out of options.
If you have practically zero interest rates, how much lower can you go?
It's the end of the week and things could get very ugly in the market today. Earlier this week I talked about not getting suckered into the fake rally as the major trend in the indices was and still is on the downside. Today may prove that I was right and here's why.
Last Friday the DOW closed at 16,433 and so far this week it's been as high as 16,933 and as low as 16,330. The S&P 500 closed last Friday at 1961.05, the range for the week so far is a high of 2,020 and a low of 1,948. The NASDAQ index closed last Friday at 4,819.79 and the range for the week so far is a high of 4,862 and a low of 4,791.
The reason that I want to bring to your attention the ranges on the three indices is that I believe the potential exists for the market to close at or close to their lows for the week. That would indicate that the markets have a dramatic down day today.
Yesterday the Euro triggered a buy signal @ 1.1370 and saw a nice pop to the upside. There is follow-through today and it would appear as though the euro is going to close at its best levels on a Friday in the last 19 weeks. I still believe that this currency can move higher against the U.S. dollar. With all of the Trade Triangles green and in a positive mode, I expect the euro to continue to advance on the upside.
The recent market rally in gold has popped up from the $1100 an ounce support area. Both the weekly and monthly Trade Triangles remain red, indicating that the bigger trend continues to be negative for this metal. With a Score of -55, the gold market is officially in a trading range. I see no compelling reason technically to want to be in this market one way or another.
The Trade Triangles are officially long the crude oil market (November contract) from $45.47. I'm looking for this market to improve from current levels. The chart formation I discussed in previous videos is, in my opinion, a continuation pattern to the upside. Crude oil is on target to have its best close on a Friday in over seven weeks.
Now that the Fed's historic non-event is behind us, I expect that next week the markets will return to a more normal state and trade based on supply and demand and not on the events like this week.
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Have a great weekend everyone and thank you for all your comments and feedback on our blog this week, much appreciated.
Stay strong, stay disciplined.
Every success with MarketClub,