Our key reversal levels going into next week:
|Status||Key (W)||Mom (W)||Mode||Key (D)||Mom (D)|
|Nasdaq||BULL||S: 3294||Up||RALLY||S: 3502||Down *|
|S&P 500||BULL||S: 1563||Up||RALLY||S: 1647.50||Up|
|Nikkei||BULL||S: 12450||Up||RALLY||S: 13885||Down *|
|FTSE 100||BULL||S: 6249||Up||RALLY||S: 6420||Up|
|DAX||BULL||S: 7819||Up *||RALLY||S: 8087||Up|
|Bonds (TLT)||BEAR||R: 116.40||Down||DECLINE||R: 110.44||Up|
|Gold (spot)||BEAR||R: 1448||Up *||DECLINE||R: 1295.55||Up|
|Euro/US$||BEAR||R: 1.3186||Up *||RALLY *||R: 1.3035||Up|
|Crude Oil(CL)||BULL||S: 93.47||Up||RALLY||S: 101.88||Up|
(Legend: W = weekly, D = daily, R = resistance, S = support, Mom = momentum, * = change from previous week/day)
* The weekly momentum for Dax is now Up, as was already the case for the other covered stock markets.
* For most stock markets the daily momentum is now stalling and for the Nasdaq and Nikkei it has turned Down already. This is the first sign of a potential peak. When that happens it is not a reason for instant panic, but it is a sign to get more careful and protect your profits with a well chosen stop-loss. When daily momentum turns down after a significant rally, then I start putting my stop-loss a few ticks below the previous day’s low. This often keeps me in the rally if there is more to come (which then turns the daily momentum back up after a few days), and if weakness continues then I get stopped out for a nice profit. E.g. Friday’s low for the Nasdaq was 3578.57, so for Monday I put my stop at ~3578.50. The Nasdaq has been in rally mode since it closed above 3435 in early July, so this locks in some 130 points profit in just two weeks, with potentially more to come if the daily momentum turns back up before the stop-loss gets hit.
* Gold has continued to fail at its daily key reversal, so remains in declining mode. But its weekly momentum is now turning up, be it tentatively. This is a first sign that it could go on to test its weekly key resistance (currently at $1448), but to do so it will need to take the next hurdle by closing above that daily key. Gold has now been stuck just below its daily key resistance for 7 trading days in a row, so it will be interesting to see which way it goes. I think we will find out next week.
* The Euro has shifted into rally mode last week, and also its weekly momentum is now turning up. Positive developments, but we need to get follow through. The Euro is in a rather narrow sideways range, and that’s why the weekly and daily key reversal levels are so close to each other. In that case the momentum can turn several times before a clear trending move emerges.
* Oil has continued to push higher, but its daily momentum is now starting to stall and may turn down next week. I keep a stop-loss near $105 and will move my stop closer to the market if the daily momentum turns down.
PS: I try to send out timely tweets when major markets are at important junctures, so follow @lunatictrader1 if you want to be kept up to date.
OK thanks Danny, I understand how it could happen, J
Actually Gold has cleared its daily key reversal which was 1294.40 by closing at 1295
True, our daily key reversal was at 1294.40 last week.
But, the daily keys get recalculated every trading day, and this is a rare case where the daily key went up even though gold didn’t close above it.
This only happens when it closes very near the key for several days in a row.
By Friday the daily key was at 1295.55 and that’s why we still have to see a close above it. That could happen in the next week.