WEAKER DOLLAR BOOSTS GOLD SHARES -- MICROSOFT IN DANGER OF BREAKING SUPPORT -- BROKERS SELL OFF ON GOOD EARNINGS
DOLLAR FALL PUSHES GOLD HIGHER... The dollar is falling sharply today against the Euro and the Japanese yen. That's pushing gold prices $4.40 higher to $411. Naturally, that's giving a boost to gold shares which are rising today. If today's gains hold, it may be a sign that gold stocks are turning higher again. Chart 1 shows the XAU Index climbing over its 50-day moving average in morning trading. The XAU has been finding support above its 200-day moving average. An upturn from here would a positive sign for the group. Newmont Mining is trading over its 50-day line for the first time in two months (Chart 2). Freeport McMoran Copper & Gold is benefitting from gains in both of those commodities. FCX recently found new support at its 50-day average. This morning's larger than expected PPI report for January may also be stoking new inflation fears which would be good for gold and other commodities. Oil stocks are the day's top sector again.
Chart 1
Chart 2
Chart 3
MICROSOFT IN DANGER OF BREAKING CHART SUPPORT... The inability of Microsoft to work out an agreement with the European Union is pushing that big tech stock lower today. Chartwise, that's not good because MSFT is in danger of breaking an important support level. Chart 4 shows the stock slipping under its November low in morning trading. The weekly bars in Chart 5 show Microsoft also in danger of breaking a major support line starting in October 2002 when the market bottomed.
Chart 4
Chart 5
BROKERS TEST SUPPORT... Despite some good earnings news from the big brokerage firms this week, the group hasn't been able to gain any ground. In fact, it's losing ground in morning trading. The daily bars in Chart 6 show that that the Broker/Dealer Index has fallen under its 50-day average and is meeting resistance at that line. It's also testing chart support at its early February low. The daily RSI remains under 50 and the MACD lines are negative. Any break of that support level would be a negative sign for the group and the rest of the market. That's because brokers are considered to be leading indicators for the big board. Global markets are trading lower today. One of the problems with this week's oversold bounce has been the lack of volume. We'll be watching to see which way the market closes today -- and which way the volume goes.
Chart 6
