U.S. stocks rallying only because of foreign weakness

Daily Market Analysis (SHORT TERM) Monday 07/30/12

KEY TERMS

OVB       Outside Vertical Bar
VRCB    Volatility Reduced Compression Bar

INDEXES

E-Mini S&P (September):  

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 07/27/12 @ 1359.00. Confirmation of a bottom with a close violation on 07/27/12 @ 1376.25. Upside Targets = 1398.00 – 1413.25.
  • Confirmation of a bottom with a range violation @ 1359.00. Confirmation of a bottom with a close violation @ 1376.25.
  • The September S&P’s rallied higher again on Friday to close at their highest level since early May fueled by…well…nothing, to speak of.
  • A less than stellar consumer confidence increase followed by a 1.5% GDP somehow provided the new investors needed as they continue to drive the S&P’s higher.
  • The only logical estimation as to the reason behind the recent stock market rally is that other foreign investment vehicles are underperforming and uncertainty remains high, therefore investors flock to large-cap stocks.
  • This trend could remain intact and inflate the market to a retest of the 2012 highs @ 1419.75.
  • Projected Daily Range: 27.25
  • Projected Weekly Range: 45.75
  • Projected Monthly Range: 95.75

METALS

COMEX Gold (December):

  • Short Term Trends are bullish.
  • Confirmation of a bottom with a range violation on 07/25/12 @ 1584.10. Confirmation of a bottom with a close violation on 07/25/12 @ 1608.10. Upside Targets = 1641.20.
  • December Gold continued its rally on Friday to new highs on the current move after running into resistance at the daily RBB and settling back below the daily mid-range.
  • Friday’s close could be a bit concerning to those who are heavy long this market following last week’s break-out in terms of volatility, but if this market trades through $1,650/oz. it should have no problem continuing to accelerate onward to the Q3 objective of $1,744.90.
  • Projected Daily Range: 23.70
  • Projected Weekly Range: 63.70
  • Projected Monthly Range: 105.00

CURRENCIES

Euro FX (September):

  • Short Term Trends are bearish.
  • Confirmation of a bottom with a range violation on 07/26/2012 @ 1.2180. Confirmation of a bottom with a close violation on 07/26/2012 @ 1.2293. Upside Target = 1.2412.
  • New highs made on current move Friday @ 1.2397. Upside Target 98% achieved.
  • The September Euro FX gave back over half of its daily gains on Friday in the last half hour of pit session trading after picking up over 320 points in the last 3 days of the week.
  • The Euro could see a solid decline this week as a short-covering rally fueled by promises of an ECB rescue if needed should fizzle as investors face the realization that printing money can only go so far.
  • Projected Daily Range: .0123
  • Projected Weekly Range: .0234
  • Projected Monthly Range: .0601

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