Intraday Market Thoughts

Archived IMT (2011.01.24)

by Ashraf Laidi
Jan 24, 2011 17:19

THE RACE TO 1300. S&P500 or Gold? S&PX WEEKLY CHART & the RSI tops. S&P500 pushes towards 1290 but 1300 is not expected. The S&P500 had its first weekly decline last week after posting 7 consecutive weekly gains, which was the longest since 2007. The last time the index had a peak-to-trough decline of more than 4% was in late November-early December. Dow-30 continued to push ahead as last it week it posted its 8th straight weekly increase. The last time the Dow-30 had an 8-week winning streak was in March-April, after which index dropped 13% coinciding with the week of the Flash Crash. This same time last year (Jan 20th) G5 equity began an 8-9% selloff that lasted 6 weeks. THE CATALYST WAS was Paul Volckers announcement to curtail banks proprietary trading operations. Both the S&P500 and the Dow-30 have exceeded all major technical measures (week and daily moving averages as well as key retracements). Aside from the Mar-Apr 2010 period when the Dow-30 gained for 8 straight weeks, it was back in Nov 2003-Jan 2004 when such an interrupted winning streak occurred. The time before that was in Jan-Mar 1998. As for a winning streak longer than 8 weeks, we must revert back to 1995 when the Dow-30 rallied for 10 straight weeks (Mar-May 1995). Fundamentally, WEDNESDAY's FOMC FOMC DECISION isnt expected to hint at curtailing the $600 bln QE2 program. The expected improvement in the FOMCs outlook (language) may help boost bond yields and allow USD some stability. Catalysts for any pullback in equities could well be downside surprises in earnings. But China tightening does remain at the top of the list of catalysts for the next leg down in gold, silver, copper and oil to the favour of the USD. FOLLOW ME ON TWITTER so as NOT TO MISS THESE UPDATES. Although I sent these updates by email to my subsciribers, you can get them the minute theyre released by following me on


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