Hi, I had a few minutes this morning to throw together some charts and make a few comments on what was a momentous week in global financial markets.
This will be extremely abbreviated but I thought it important to give my readers a perspective on these developments because I believe they set in motion a course of events that will lead this market higher into the election.
Earlier today, the major stock indexes were trading sharply lower. The highly followed SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) was trading down to the $122.82 level. This afternoon, the DIA is rallying off of the lows to to 124.12 a share. This is still a very good intra-day bounce especially if you happen to be a scalp trader.
Positive Divergence: Dollar vs. Market Suggest Stock Rally Soon
Once again, the U.S. Dollar Index (DX-M2) is declining lower after the opening bell rings at the New York Stock Exchange. This happens very often when the major stock indexes are breaking lower. You see, when the dollar declines everything in the stock and commodity markets will inflate and trade higher. Just the opposite will happen when the U.S.
Nearly every trading session when the stock market is lower the U.S. Dollar Index is higher. Well, that is certainly the case once again today. This morning, the U.S. Dollar Index futures (DX-M2) are trading higher by 0.38 cents to $79.69 per contract. While 0.38 cents does not sound like much in the U.S. Dollar Index; it can move markets.
How To Trade It: Technology Tumbles, Europe Fears Go
The markets opened nicely higher only to get slammed once again. Last week the markets saw their largest decline of 2012. The down cycle called by Chief Market Strategists at InTheMoneyStocks is fully in play. European worries continue to increase and technology has seen a sharp pull back from its recent highs.
After months of calculations and proprietary chart analysis, Chief Market Strategists discovered a cycle pivot point in the market. This pivot cycle date would begin the demise of the current bull raid on Wall Street. It was stated to members that the cycle would have a 'rounded top', then a sharp rollover.
This afternoon, spot gold is surging higher by $27.00 to $1689.00 an ounce. The precious metal took off to the upside after the Ben Bernanke speech this morning which stated that the Federal Reserve would continue with further accommodating policies. Gold is one of the best indicators that inflation is being created.
The U.S. markets awoke on Monday morning to find Federal Reserve Chairman Ben Bernanke giving a speech on the economy. Any speech where he leaves the possibility of more QE (quantitative easing) on the table helps the markets jump. Today was no different. The futures took off as he spoke, surging off of the worst week in the markets since December 2011.