Stocks and Gold Slice Through Support
Stock-Markets / Financial Markets 2010 Feb 09, 2010 - 01:56 AM GMTBy: Graham_Summers
The S&P 500 sliced through its January lows yesterday, killing any notion that this latest drop is just a brief dip with which to buy. The next lines of support are the November low (1,040) and then the October low (1,020).
The US Dollar index rallied strongly above 78-79 to test 80. This area will likely prove major resistance (look how long it took for the Dollar to break below this level back in 2009). Any break above 80 and we’re going to see stocks and commodities WAY down.
Gold broken down below key support. We’re likely going to $1,025 or even $1,000 in the near future. The near-term uptrend has been broken. It will take a while for the bulls to reclaim control here.
Finally, as nasty as things were for the US, they’re even nastier abroad. Emerging markets are already down more than 10% from the January highs compared to a 7% drop in the S&P 500.
It looks as though the deflation trade has once again taken the reins. The Dollar is up as are Treasuries while everything else is down. Also, the US has begun to outperforming emerging markets (a complete reversal from the trend of the rally since March 2009).
This could very well be the start of something much, much larger. Keep your eye on the Dollar for signs of what’s to come.
Good Investing!
Graham Summers
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Graham Summers: Graham is Senior Market Strategist at OmniSans Research. He is co-editor of Gain, Pains, and Capital, OmniSans Research’s FREE daily e-letter covering the equity, commodity, currency, and real estate markets.
Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.
Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.
© 2010 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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