A Quick Quad-Market Assessment of the Selloff Thursday

Feb 4, 2010: 11:28 PM CST

With all major markets falling sharply on Thursday, I though it would be a good idea to take a quick “fly-by” glance at the daily charts of the S&P 500, Gold, Crude Oil and then the US Dollar Index.

Let’s start with the S&P 500:

A quick glance shows the “Cradle” sell signal was accurate, as I highlighted in yesterday’s post:

Overhead Cradle Resistance in the S&P 500.

What now?  The 20 and 50 day EMAs have officially crossed ‘bearishly,’ and the S&P 500 cracked under the critical 1,070 and 1,080 support zone.

A quick glance shows that the next level of likely support rests with the October and November 2009 lows in the 1,020 and 1,030 region.

Next, Gold Daily:

Gold had another $50 point loss today, similar to that of December 4th (ironic one-month anniversary).

Gold also broke the critical $1,070 support zone I highlighted in a prior post:

Critical Line in the Sand for GLD/Gold”  (sellers broke the critical level)

It would appear that odds favor a completion of the Bear Flag (blue line) in Gold down to the $1,020 level (ironically, similarly to the S&P 500 index level).  Again, that is a quick chart assessment.

Crude Oil:

The $72.00 level in Crude Oil represents a critical level not yet (officially) broken, though should sellers push price down two more dollars, then the essential support line at $70.00 would come into play.

A break under $70.00 would target the $65.00 level – September’s swing low.

Crude Oil – like the S&P 500 – also formed a Cradle Sell Signal on the short-lived rally back to the $77.00 area (notice the doji that formed at that level).

The US Dollar Index:

Finally, the US Dollar Index looks solidly to be on trajectory to complete its daily bull flag, as also mentioned in:

Bull Flag Formation in the US Dollar Index

and

Dollar Index Update:  A Bump in the Road to Complete the Bull Flag?

The $80.50/$81.00 level reflects both the Bull Flag completion target and a prior level of overhead resistance from July.

Continue watching these levels across these important markets.

To stay up to day regularly with opportunities and targets/structure for these markets, including the 10-Year Notes, become a member of the Weekly Intermarket Report service, which is a 20+ PDF document published each week which provides regular commentary on the Monthly, Weekly, and Daily charts of these markets.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

7 Comments

7 Responses to “A Quick Quad-Market Assessment of the Selloff Thursday”

  1. sonofabear Says:

    nice charts.

  2. Diggy - Upgradereality.com Says:

    Hey Corey!
    Nice charts man. I personally see support at 1048 and then 1042 but after that it could drop as far as 1020. I see upwards resistance at 1085 and don't expect it to go up above there anytime soon.

    Gold I see going to 1020 or 1000 🙂

    Keep up the cool analysis
    Diggy

  3. Corey Rosenbloom, CMT Says:

    Thanks Diggy!

    The weekly SPX 50 EMA rests at 1,041 which confluences with the prior daily support level.

    There's a brick wall (EMAs) overhead and it would take some powerful buying and a hideous bear trap to break through.

    Gold looks to be targeting the $1,020/$1,000 level indeed – critical support there.

  4. Richard Says:

    Corey thanks for the comprehensive set of charts — its nice to have the chart of the S&P, Gold, Oil and the US Dollar all in one place for reflection and analysis.

    We are now in a deflationary economy, so for sure the S&P is going down, down and down — its “hasta la vista, baby” for the S&P!

    Oil from your chart will find support lower at $66, then $60 and finally fall below $60 — the support level of $60 will then serve as resistance, so we will see oil in the $50s for quite some time.

    You have been consistently right on with the US Dollar, its in a bull run.

    Now, gold — it's that which will preserve one's wealth as concerns over Sovereing Debt arise and the PIGS, Portugal, Italy, Greece and Spain, exert their Sovereignty over that over the European Union by failing to reing in debt.

    The yield curve continues to steepen on concern over Sovereing Debt in general; the steepening yield curve is seen in the following interest rate spreads, which has created an investment demand for gold since August 15, 2010 when gold rose above $950.
    1) the TBT to PST spread began increasing April 13th and then again October 1, 2009
    2) the TIP to IEF spread began increasing May 4th and then again October 11, 2009
    3) the LQD to SCPB spread began increasing October 14, 2009
    4) the $UST30Y to $UST1M spread began increasing September 10th and then again December 12, 2009.

    The investment demand for gold truly began to grow on October 1, 2009, as the yield curve steepened; this can be seen in the chart of the gold etf, GLD, relative to the world stock etf, VTI — GLD:VTI.

    As, curriencies, DBV, stocks, VT, Treasury Bonds, TLT, fail, gold will be the safe have investment.

    My investment maxim is simple: in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength. Despite today's downturn, gold is in a bull market; therefore, continued price dips in gold represent buying opportunities. One's wealth is now best garnered and protected by investing in gold at BullionVault.com, GoldMoney.com, buying British Sovereign Coins, and buying the gold ETF, GLD, in a trust account, not a brokerage account.

  5. Richard Says:

    Corey thanks for the comprehensive set of charts — its nice to have the chart of the S&P, Gold, Oil and the US Dollar all in one place for reflection and analysis.

    We are now in a deflationary economy, so for sure the S&P is going down, down and down — its “hasta la vista, baby” for the S&P!

    Oil from your chart will find support lower at $66, then $60 and finally fall below $60 — the support level of $60 will then serve as resistance, so we will see oil in the $50s for quite some time.

    You have been consistently right on with the US Dollar, its in a bull run.

    Now, gold — it's that which will preserve one's wealth as concerns over Sovereing Debt arise and the PIGS, Portugal, Italy, Greece and Spain, exert their Sovereignty over that over the European Union by failing to reing in debt.

    The yield curve continues to steepen on concern over Sovereing Debt in general; the steepening yield curve is seen in the following interest rate spreads, which has created an investment demand for gold since August 15, 2010 when gold rose above $950.
    1) the TBT to PST spread began increasing April 13th and then again October 1, 2009
    2) the TIP to IEF spread began increasing May 4th and then again October 11, 2009
    3) the LQD to SCPB spread began increasing October 14, 2009
    4) the $UST30Y to $UST1M spread began increasing September 10th and then again December 12, 2009.

    The investment demand for gold truly began to grow on October 1, 2009, as the yield curve steepened; this can be seen in the chart of the gold etf, GLD, relative to the world stock etf, VTI — GLD:VTI.

    As, curriencies, DBV, stocks, VT, Treasury Bonds, TLT, fail, gold will be the safe have investment.

    My investment maxim is simple: in a bull market be a bull; in a bear market be a bear. In a bull market, one buys on dips; in a bear market, one sells into strength. Despite today's downturn, gold is in a bull market; therefore, continued price dips in gold represent buying opportunities. One's wealth is now best garnered and protected by investing in gold at BullionVault.com, GoldMoney.com, buying British Sovereign Coins, and buying the gold ETF, GLD, in a trust account, not a brokerage account.

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