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Tuesday, January 12, 2010

Can The Bulls Show us Some Follow Through on Wednesday, Can They Show us the Money!


The S&P 500 closed lower due to profit taking on Tuesday as it consolidated some of this winter's rally. The high range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1119.71 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 62% retracement level of the 2007-2008 decline crossing at 1155.15 is the next upside target. First resistance is Monday's high crossing at 1147.90. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 1155.15. First support is today's low crossing at 1127.80. Second support is the 20 day moving average crossing at 1119.71.

The NASDAQ 100 closed lower due to profit taking on Tuesday and below the 10 day moving average crossing at 1876.75 signaling that a short term top has been posted. The mid range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought, diverging and are turning bearish hinting that a short term top might be in or is near. Closes below the 20 day moving average crossing at 1851.18 are needed to confirm that a short term top has been posted. If March extends this winter's rally, the 75% retracement level of the 2007-2008 decline on the weekly continuation chart crossing at 1947.00 is the next upside target. First resistance is Monday's high crossing at 1900.00. Second resistance is the 75% retracement level of the 2007-2008 decline crossing at 1947.00. First support is the 20 day moving average crossing at 1851.18. Second support is today's low crossing at 1850.00.

The Dow closed lower due to profit taking on Tuesday as concerns over tightening credit by the Chinese could delay our economic recovery. The mid range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near term. If the Dow extends this winter's rally, the 62% retracement level of the 2007-2008 decline crossing at 11249 is the next upside target. Closes below the 20 day moving average crossing at 10508 are needed to confirm that a short term top has been posted. First resistance is Monday's high crossing at 10655. Second resistance is the 62% retracement level of the 2007-2008 decline crossing at 11249. First support is the 10 day moving average crossing at 10,573. Second support is the 20 day moving average crossing at 10,508.

The U.S. Dollar closed slightly higher on Tuesday as it consolidated some of Monday's decline. The mid range close sets the stage for a steady opening on Wednesday. Stochastics and the RSI remain bearish signaling that sideways to lower prices are possible near term. If March extends Monday's decline, the 50% retracement level of the November December rally crossing at 76.66 is the next downside target. Closes above last Friday's high crossing at 78.44 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 77.81. Second resistance is last Friday's high crossing at 78.44. First support is today's low crossing at 76.89. Second support is the 50% retracement level of the November-December rally crossing at 76.66.

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