Wednesday, November 10, 2010

Interesting Times are Approaching

Traders that take a contrary position often end up on the profitable side of a trade. The U.S. $ may prove to be a textbook case. When Ben Ponzi announced that he and his financial alchemists were going to manipulate the markets last week the US $ had every reason in the world to tank--it didn't--instead it appears to have made a low.
Cycles suggested that a low was pending on the charts posted over the last several days. (I have included the October 27th chart showing the time price cycle that caught the momentum low) The chart immediately below shows the bullish divergences that have formed with the QE II spike.

A close above 78.36 (cash) would be considered EXTREMELY BULLISH.

Silver certainly likes to be a drama queen. Margins were raised on the futures contract today which prompted a reversal. I cannot help remember good Old Bunker Hunt in 1980 when he and his brother attempted to corner the market. Silver was trading at over $50.00 an ounce only to crash back to reality.
Silver bears close monitoring as it could possibly be the mirror image of the USDX. If the market does not repair the hideous weekly candlestick forming a significant reversal may be at hand.

The S&P is at a critical area. Fibonacci levels are once again being tested while the weekly charts venture into overbought territory. While a move to the 1250 level is quite possible coincident with the November 20-25 geometric projections for a trend change, the S&P could reverse at this level since November 8th represented a relatively powerful ENERGY DATE.
A close below 1193 Cash would likely confirm a reversal in trend.
A major reversal would be confirmed if the Cash traded below 1171.70 and the Dec contract traded below 1167.80

Note that 30 degrees up from the low has been support. Could 15 degrees from the high be the ultimate resistance?

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