The Beat Goes On And On And On…

The beat goes on and on and on. I am of course talking about the debt ceiling talks which are absolutely imperative to the U.S. I think that most Americans are just getting disgusted with both parties and I think come election time we will see some major changes.

This should be a very interesting Friday with Gold at or close to its highs and Silver higher for the day so far. The equity markets just seem to be hanging on by their fingernails now and I expect we will see further pressure on the markets as the day wears on. Unless there’s some major news that comes out I can’t imagine these markets rallying from their current levels.

The opportunities to make money right now are huge. We’ve outlined clearly in our past reports the line in the sand for the S&P 500 and of course we remain positive on the precious metals. One trade you might want to consider this weekend is Gold. If Gold closes at or close to its highs for the day we want to go home with an additional trading unit. If this happens it will qualify as a 52 week high trade rule which means you go home long Gold and take profits on Monday or Tuesday. Use tight money management stops on this position.

Now, let’s go to the markets and see how we can protect and make your money grow.

S&P 500

Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 75
It looks like this market is just teetering on the edge of a precipice. The symmetry of the S&P500 is striking and should not be ignored as we could be making a right shoulder of a much larger head and shoulders formation. The Trade Triangles remain in a positive mode and we are expecting resistance around the 1333 to 1338 levels. Look for support to come into this market around the 1300 level. The 200-day moving average comes in at 1276, as does a long-term trend line from the lows set in March of 2009.

SILVER

Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 90
A close today over 39.50 will be viewed as extremely bullish for this market. Traders should be long this market as all of our Trade Triangles are in a positive mode indicating higher prices ahead. As we have been indicating, we are expecting this market to reach highs towards the latter part of Q3 and early Q4. Look for support for this market at 36.00.

GOLD

Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 100
The current market action in gold is very positive and this market is more than likely going to qualify for a 52 week high rule. Any market that is making all time highs must be considered bullish. All of our Trade Triangles are green indicating that a strong trend is in place. We expect to see this market move over $1,600 an ounce in the near future. Longer term, we are looking for a move higher until the end of Q3 and possibly into Q4.

CRUDE OIL

Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = – 55
The -55 score indicates that this market remains in a trading range. At the present time, the crude oil market continues to have problems just over the $99 a barrel price point. Both are indicators long-term and intermediate term remain negative for this market. Support comes in around $94 a barrel and resistance coming in just over $99.

DOLLAR INDEX

Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 75
For the past two months, this index has been trapped in a broad trading range. The Dollar index remains below its 200 day moving average. The longer term trend for the Dollar index is positive based on our Trade Triangle technology. Resistance remains between 76.00 and 77.00. Support comes in today at 74.00.

REUTERS/JEFFERIES CRB COMMODITY INDEX

Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 60
Since May of this year this index has moved in a broad trading range. Our Trade Triangle technology is mixed on this market at the present time. Resistance is now at 350 and support looks to be at 340.

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Markets Attempt To Rally on Meredith Whitney Comments

The S&P 500 was lower overnight as it consolidates below the 25% retracement level of the March-June rally crossing at 882.35. Stochastics and the RSI are oversold but remain neutral to bearish signaling that sideways to lower prices are possible near term.

Market futures are attempting to rally as Meredith Whitney makes positive comments about the banks on CNBC this morning. She did go on to call for 13% unemployment and another 15-50% downside in home prices.

If September extends this month's decline, the 38% retracement level of the March-June rally crossing at 845.09 is the next downside target. Multiple closes above the 20 day moving average crossing at 898.31 are needed to confirm that a short term low has been posted.

Day traders are watching a potential break of the 884.50 level to give us a gap fill into the 894-896 area. If the pivot point holds for the bears the next short target is 857.75

From a broader perspective, the September S&P index appears to be forming a broad head and shoulders top. Closes below 873.10 would confirm a downside breakout of neckline support thereby opening the door for a possible test of the 38% retracement level of the March-June rally crossing at 845.09.

Monday's pivot point, our line in the sand is 874.50

First resistance is the 10 day moving average crossing at 889.58.
Second resistance is the 20day moving average crossing at 898.31.

First support is last Wednesday's low crossing at 865.50.
Second support is the 38% retracement level at 845.09.

The September S&P 500 Index was down 1.30 points at 873.00 as of 5:56 AM CST. Overnight action sets the stage for a lower opening by the September S&P 500 index when the day session begins later this morning.

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