LunaticTrader

Investing with the Moon

Key reversal levels for week of September 9, 2013

Posted by Danny on September 7, 2013

Our key reversal levels going into next week:

Current Status Key (W) MoM (W) Mode Key (D) MoM (D)
Nasdaq 3660 BULL S: 3426 6.07 (6.69) RALLY * S: 3607 0.60 (-0.26)
S&P 500 1655 BULL S: 1598 2.78 (3.79) DECLINE R: 1665 -2.34 (-3.58)
Nikkei 13861 BULL S: 12718 0.90 (1.33) RALLY * S: 13681 1.83 (0.90)
FTSE 100 6547 BULL S: 6321 1.39 (1.79) DECLINE R: 6547 0.11 (-0.68)
DAX 8276 BULL S: 8010 2.06 (2.42) DECLINE R: 8305 -2.73 (-3.39)
Bonds (TLT) 103.05 BEAR R: 111.82 -6.46 (-6.73) DECLINE * R: 105.17 -0.98 (0.12)
Gold (spot) 1391.5 BEAR R: 1429.50 0.20 (-0.93) RALLY S: 1358.40 1.65 (2.63)
Euro/US$ 1.3176 BULL S: 1.3066 2.36 (2.66) DECLINE R: 1.3284 -4.53 (-4.11)
Oil (CL) 110.53 BULL S: 98.31 5.09 (5.4) RALLY S: 105.85 2.39 (2.19)

(Legend: W = weekly, D = daily, R = resistance, S = support, MoM = momentum monitor, * = changed from previous week/day)
(for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )

Important developments in the key reversal levels last week:

* The Nasdaq and the Nikkei have climbed back into rally mode. Other stock markets may follow as their daily momentum (MoM) has turned up.

* But weekly momentum remains down for all covered stock markets, so the correction may not be over yet. Up to now the correction has been mild and mostly sideways, but unless the weekly momentum turns up again, another swing to the downside is in the cards.

* All stock markets remain in bull status, and well above their weekly key reversal levels.

* Bonds (TLT) have failed to build on last week’s gains and quickly reverted into decline mode again. The weekly momentum for bonds continues to go up however, so this may be just a retest of the recent lows from which another rally can start. See also our notes about the key target zone for bonds.

* Gold has tested its daily key reversal level last week and successfully held above it. The daily MoM continues to be down for gold, so we may get another test and possibly see gold go into decline mode. Watch the daily key level carefully.

* The Euro/US$ stays in decline mode with downward momentum, but remains in bull status as long as it stays above the weekly key reversal level at 1.3066 (on a weekly closing basis). The Euro going into bear status could have consequences for other markets. For example gold has been going up and down together with the Euro in recent months.

* Oil remains in rally mode, and it is clear that a good deal of its strength is based on the ongoing events in the Middle East. The daily momentum has turned up again, but its weekly momentum remains down. So, it is still very much a mixed bag and thus hard to tell in which the direction the next major move of oil prices will go.

And here are our key target zones (we recommend using a +/-1% zone around these targets):

 Key Targets Top Top2 Bottom Bottom2
Nasdaq 3730 3830 3530  3210
S&P 500 1738 1799 1576 1522
Nikkei 16580 17980 12710  10450
FTSE 100 6750 7100 6205 6110
DAX 8550 8920 7870 * 7210
Bonds (TLT) 128.50 134 102 96.25
Gold (spot) 1448 1540 1078 1001
Euro/US$ 1.36 1.3950 1.2350 1.17
Crude Oil(CL) 109.40 121 89.50 77

(* = new target, Bold = closely matches a major weekly key target )
(for more details about these key targets, see: https://lunatictrader.wordpress.com/2013/08/20/key-target-levels/ )

I am renaming this to target “zones” rather than target “levels”, which makes it more clear that we don’t expect the targets to be reached exactly

Important developments last week:

* We have one new bottom target for the DAX at 7870.

* Bonds (TLT) have dropped back to their first bottom target at 102, and so far holding above it. If it gets broken then we can set sights on the next bottom target at 96.25

* Crude Oil is once again testing its top target around $110. The daily target is at $109.40 and the weekly target is at $110. It remains a difficult hurdle to take for oil, but if it does break out convincingly then we can set sights on $121 oil. If it fails again, then look for $89.50 oil.

Be well,

Danny

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5 Responses to “Key reversal levels for week of September 9, 2013”

  1. bob collett said

    Hi Danny
    Please clarify….
    We should NOT buy until a market reaches it KEY LEVEL.
    So Gold is not a buy until 1429.5
    Or do the key levels just act as bullish/bearesh indicators?
    regards
    bob

    • Danny said

      Hi Bob,
      See the Key reversal article page linked in the left sidebar. I am going to write up a more complete article when time permits. For now it links to the main posts in which I explained the basic concepts for using these levels.

      In brief. Gold is still in bear market status, and that would change if it manages a weekly close above its weekly key level at 1429.5. A long term investor tries to go with the long term trend, so when that happens he would change from short to long.
      A short term investor would work more with the daily key reversal levels, and would be long already since gold went into rally mode a couple of weeks ago.
      A speculator, who tries to get in near the tops and bottoms, would have gone long gold as soon as its daily momentum turned up from very oversold level.

      So, there is something for every type trader/investor in these key levels.
      What I intend to do is list the most viable strategies for every possible key levels situation.
      For example: if the status is bull while the daily mode is decline, then it is an ordinary market pullback or correction and can be bought as soon as the daily MoM turns up from oversold level.

      Danny

  2. rachel said

    hi
    what r these numbers under momentum dont get it .gold daily: 1.65 (2.63) ….?

    • Danny said

      Hi Rachel,

      The momentum (MoM) is now displayed in numeric format, rather than just “up” or “down”.
      I will explain them in an upcoming post.
      The number between brackets is the previous day (or week) value, so you can still see whether momentum is going up or down. But there is useful information in the number itself as well. It varies between 10 and -10, with 10 being most overbought and -10 very oversold.
      Stay tuned for further details about it.

      Danny

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