GOLD BREAKS CHART SUPPORT AS COMMODITIES WEAKEN -- STOCKS TEST JUNE HIGHS -- WATCHING THE LONG BOND FOR SIGNALS
LONG BOND TESTS SUPPORT... I wrote last week that the long Treasury bond probably needed to break initial chart support to signal a stock market bottom (since they trend in opposite directions). Although Treasuries have pulled back this week (as stocks have risen), no short-term sell signal has been given for Treasuries. Chart 1 shows the 20+year T-Bond (TLT) pulling back to initial support at 98.18 and its 50-day moving average. A close below both of those levels is needed to signal some profit-taking in the long bond. Chart 2 shows the 10-Year Treasury Note Yield (TNX) also still in a downtrend. A close above its July intra-day high at 31.24 is needed to reverse its three-month downtrend. Until that happens, the current stock rally will remain unsupported by Treasury bonds.
(click to view a live version of this chart)
Chart 1
(click to view a live version of this chart)
Chart 2
STOCK INDEXES TEST JUNE HIGHS... The summer stock rally has also reached some overhead resistance barriers. Last week's rally set the stage for a test of the June highs in several indexes. Chart 3 shows the Dow Industrials right up against that important chart barrier. Chart 4 and 5 show the S&P Small Cap and Mid Cap Indexes doing the same. Chart 6 shows the NYSE testing its June high and 200-day average at the same time. Chart 7 shows the S&P 500 struggling around its 200-day line. All of which puts the July rally at a critical point. A decisive close over the June highs by most stock indexes is necessary to extend the summer rally.
(click to view a live version of this chart)
Chart 3
(click to view a live version of this chart)
Chart 4
(click to view a live version of this chart)
Chart 5
(click to view a live version of this chart)
Chart 6
(click to view a live version of this chart)
Chart 7
COMMODITY RALLY STALLS... Stocks aren't getting much support from commodities today. Charts 8 and 9 show the DB Commodities Tracking Index and the United States Oil Fund backing off from their June highs as well. Chart 10 shows copper struggling with its 200-day average. Whether or not commodities are able to overcome those resistance barriers may also help determine the direction of stocks which rallied along with commodities over the last month.
(click to view a live version of this chart)
Chart 8
(click to view a live version of this chart)
Chart 9
(click to view a live version of this chart)
Chart 10
GOLD BREAKS SUPPORT... Gold prices are falling today as well. Chart 11 shows the Gold Trust Shares (GLD) falling below their late May low on heavy volume. That sets up an important test of its 200-day moving average. Gold stocks are also suffering. Chart 12 shows the Market Vectors Gold Miners ETF (GDX) falling below its 200-day line. A test of its May low near 46 appears likely.
(click to view a live version of this chart)
Chart 11
