What a ride we had past few weeks. Retail investors are absolutely clueless, thanks for the financial media.  CNBC and Bloomberg have been using the following formula for past few weeks:

Markets up = Maybe selloff was overdone, people finding buying opportunity. US recovery is here, it is just a matter of time, rest will follow.

Markets down = EU soviergn risks pose a contagion threat and China is tightening, while australian mining tax will curb any expansions and flow of further capital.

In summary, they have been clueless as well. So do your own analysis, even if you are wrong, at least you spent more time considering your investments than you do for your annual holidays.

Dow Jones

Weekly charts show that we are at a critical juncture. The supply line from Oct 2007 to 19 May 2009 extended on chart against demand line form March 2009 to July 2009. The demand line was broken once, followed by strong upsurge to 200MA (around 19 April).

They key is to watch whether the supply line now becomes demand line to hold the markets. It certainly looked like that on 24 May 2010 followed by intraday high of 10288. If markets had a weekly close above 10288, I would have had strong reasons to be bullish. However, we closed below that level, and looks like we will come back under the supply line and 50SMA.

Bearish bias below 9888 and any rallies to be capped by 20SMA ie, 10531 level at the moment.

Bullish bias for a weekly or two consecutive daily close above 10288 level. This would form a strong upward momentum based on a bounce off 50SMA.

If going short, the target should be 38.2% fib around 9428. For long, initial target should be 200MA around 11083.

Gold

Strong uptrend continues, a h&s / crown pattern developed right around the edges of a demand line formed off lows of Oct 2008 and August 2009. Next fib extension and whole number resistance around 1300. Alternatively, a buy around 1157 for a double bottom and trend line retest formation.

Oil / Crude

The price did not even breach the 50% of the top to base move between July 2008 to March 2009 around 8950. This is bearish, and recently it broke the demand line off the lows of Sep, Dec 2009 and Feb 2010. The same demand line became reistance along with 50SMA’s pressure (circled). Technically the chart is extremely bearish – Capitulation of Bulls.

However, with BP’s oil waste scenario, and increased tensions in Middle East. This one may do some non-technical pops along the way or even make a turnaround. Therefore it is technically difficult to discern given looming fundamental variables. Suggest no trading in oil for a while.

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