Our key reversal levels going into next week:
| Current | Status | Key (W) | MoM (W) | Mode | Key (D) | MoM (D) | |
| Nasdaq | 3722 | BULL | S: 3449 | 5.94 (6.07) | RALLY | S: 3643 | 6.48 (5.93) |
| S&P 500 | 1688 | BULL | S: 1603.40 | 2.31 (2.78) | RALLY * | S: 1657.60 | 5.27 (4.25) |
| Nikkei | 14405 | BULL | S: 12814 | 1.08 (0.9) | RALLY | S: 13890 | 5.99 (5.72) |
| FTSE 100 | 6584 | BULL | S: 6337 | 1.43 (1.39) | RALLY * | S: 6491 | 3.36 (3.02) |
| DAX | 8509 | BULL | S: 8035 | 2.04 (2.06) | RALLY * | S: 8278 | 4.21 (2.88) |
| Bonds (TLT) | 103.55 | BEAR | R: 111.17 | -6.28 (-6.46) | DECLINE | R: 104.49 | -2.99 (-3.29) |
| Gold (spot) | 1325.8 | BEAR | R: 1429.20 | 0.57 (0.20) | DECLINE * | R: 1381.20 | -3.0 (-1.76) |
| Euro/US$ | 1.3298 | BULL | S: 1.3075 | 2.01 (2.36) | RALLY * | S: 1.3213 | -0.15 (-1.11) |
| Oil (CL) | 108.21 | BULL | S: 98.85 | 4.94 (5.09) | RALLY | S: 106.50 | 0.98 (1.29) |
(Legend: W = weekly, D = daily, R = resistance, S = support, MoM = MoM indicator, * = changed from last week)
(for more details about these key levels, see: https://lunatictrader.wordpress.com/key-reversal-levels/ )
(for information about the MoM indicator, see: https://lunatictrader.wordpress.com/2013/09/14/mom-indicator/ )
Important developments in the key reversal levels last week:
* All covered stock markets are back in rally mode with daily momentum (MoM) going up nicely. Weekly momentum for most markets is now starting to turn back up as well, which means stocks will probably be showing a fully bullish picture again by next week… unless we get a sudden downturn.
* All stock markets remain in bull status, and well above their weekly key reversal levels.
* Bonds (TLT) are still in bear status and decline mode. But both the daily and weekly MoM are going up. Bonds are coming off a very pessimistic MoM-7.7 bottom on the weekly chart, which indicates a nice rally is in the cards once it can close above its daily key reversal level at $104.49. This could happen as soon as the Fed announces tapering of its QE program in a classic “sell the rumor and buy the news” reflex.
* Gold has gone into decline mode, and is now seeing quickly falling daily MoM. I wouldn’t consider to buy gold until we see MoM stabilize and turn up again.
* The Euro/US$ is back into rally mode, but not very convincingly. This remains a very choppy market, with little or no momentum either way. It will go into a good trending move eventually, but we have to be patient. I think the better odds are for a move to the downside, so on a close below the daily key level at 1.3213 I would consider taking short positions.
* Oil remains in rally mode, but both the daily and weekly MoM are going down. The repeated failure to climb above $110 and the weakening momentum suggest that the path of least resistance is down for oil. Time will tell.
And here are our key target zones (we recommend using a +/-1% zone around these targets):
| Key Targets | Top | Top2 | Bottom | Bottom2 |
| Nasdaq | 3730 | 3830 | 3530 | 3210 |
| S&P 500 | 1738 | 1799 | 1576 | 1522 |
| Nikkei | 16580 | 17980 | 12710 | 10450 |
| FTSE 100 | 6750 | 7100 | 6205 | 6110 |
| DAX | 8550 | 8920 | 7870 | 7210 |
| Bonds (TLT) | 128.50 | 134 | 102 | 96.25 |
| Gold (spot) | 1448 | 1540 | 1078 | 1001 |
| Euro/US$ | 1.36 | 1.3950 | 1.2870 * | 1.2350 |
| 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/ )
Important developments last week:
* We have one new bottom target for the Euro/US$ at 1.2870.
* The Nasdaq reached its top target at 3730 last Tuesday and has remained stuck at that level for the rest of the week.
* The DAX is also close to its top target at 8550.
* Bonds (TLT) are testing their bottom target at 102 again.
* Oil seems to have failed on its second attempt to get above its $109.40 top target.
Good luck,
Danny
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