A LOT OF MARKETS ARE AT CRITICAL CHART JUNCTURES -- GOLD REACHES $1,000 TARGET WHILE DOLLAR PULLS BACK FROM ITS NOVEMBER HIGH -- MAJOR MARKET INDEXES ARE TESTING THEIR NOVEMBER LOW AND THEIR 2002 BOTTOM

GOLD TOUCHES $1000 FOR FIRST TIME IN A YEAR... A number of financial markets are testing important chart points. Let's start with gold. Bullion touched $1,000 today for the first time since last March. Chart 1 shows the streetTracks Gold Trust (GLD) very close to touching its March 2008 high at 100. On a short-term basis, however, the price of gold looks overbought. Some profit-taking from this level wouldn't be surprising. If that's true, some counter-trend moves may be seen in some other markets. The dollar may have also started one.

Chart 1

DOLLARS DIPS AS EURO BOUNCES ... The U.S. Dollar has been rising along with gold since December. Chart 2, however, shows the Power Shares DB US Dollar Index Fund (UUP) dropping today from chart resistance near its November high. Chart 3 shows the Euro bouncing off chart support along its November low. That suggests that some "short-term" market dynamics might be changing. A weaker dollar might contribute to some profit-taking in gold and buying in some oversold commodities. A bouncing Euro might suggest that the recent selloff in stocks is overdone as well. I've shown before that stocks have been trading in tandem with the Euro since midyear and opposite the dollar.

Chart 2

Chart 3

BOUNCING EURO MAY HELP EAFE... Chart 4 shows the close correlation between the Euro (solid line) and EAFE iShares (price bars) over the last six months. Both bounced in November and are in the process of retesting that prior low. Today's impressive bounce in the Euro may be enough to keep the EFA above its fourth quarter low for the time being.

Chart 4

DOLLAR PULLBACK MAY PROVIDE SOME STOCK SUPPORT... Chart 5 shows an inverse correlation since midyear between the dollar (green line) and the S&P 500. The dollar pullback today from its November peak may enable the S&P to hold above its November low, at least for awhile. Both the Dow and the S&P 500 are testing their November lows which represent a critical chart point.

Chart 5

S&P 500 IS RETESTING 2002 LOWS... There are two important tests going on at the moment. The daily bars in Chart 6 show the S&P 500 resting its late-November low. The intra-day low formed on November 21 was 741 while the November 20 low close was 752. The S&P came within 2 points of that earlier close today before stabilizing a bit to close at 770. That November low has even more importance. The monthly bars in Chart 7 show that the November low corresponds closely with the 2002 low at the end of the last bear market. Needless to say, a test of a prominent low several years back puts the market at a very critical point. Several other market indexes are testing those same lows.

Chart 6

Chart 7

MORE STOCK INDEXES ARE TESTING 2002 LOWS... The next three charts show the Dow Industrials, the NYSE Composite Index, and the Wilshire 5000 indexes bearing down on their 2002 lows. Obviously, the market has reached another moment of truth. Although market indexes stayed above their November low today, the market is going to have to do a lot more than that to remove the threat to its 2002 low.

Chart 8

Chart 9

Chart 10

STOCKCHARTS.COM WINS READERS CHOICE AWARD... I'll be attending the Traders' Expo at the Marriott Marquis in New York this weekend to accept an award on behalf of Stockcharts.com. Technical Analysis of Stocks & Commodities Magazine (www.traders.com) takes a poll of its readers each year to rate technical services in several categories. Stockcharts.com has won the 2009 Readers Choices Award for "Best Technical Analysis Website" for the eight straight year. The John Murphy Chart Pattern Recognition MetaStock plug-in also took first place in its category. [More information on the CPR can be found under software in the Online Bookstore]. The awards will be presented at the TA booth Sunday afternoon around 4:15 pm (NY time). Come by and say hello.