Courtesy of InTheMoneyStocks
This past week the S&P 500 INDEX,RTH (INDEXSP: .INX) gained 1 point when all was said and done into Friday’s close. The broad based market cap weighted index did happen to close above the weekly 50 moving average after testing and briefly piercing the February 5th pivot low. The pattern on the weekly chart is a bottoming tail at a support level which could lead to further upside. However, every rally has been sold recently and that type of continued action cannot be ruled out. Next week is a holiday shortened week in the U.S. as the market is closed on May 31, 2010 for the Memorial Day holiday. Therefore, the holiday will give the European Union an extra day to come up with some calming news before the U.S. markets resume trading on Tuesday June 1st, 2010. As of this time it is prudent to expect more volatility as the markets remain uncertain.
The SPDR Gold Trust (ETF) (NYSE:GLD) gained $3.66 this past week to close at $118.88 for the week. The pattern on the gold chart is an inside week. Often this pattern can go either way and will usually require more time to define a move. The one positive for the GLD is the overall trend remains intact and healthy on the weekly chart. As of this time the GLD looks to be consolidating the recent double top high made on May 12th, 2010. Most traders and investors continue to hold gold because of the massive money creation by the central banks around the world. As we all know by now gold has been considered a global currency since the beginning of time and will likely remain that way until the end of time. If the stock markets did go into a deflationary spiral gold could get dragged down with everything else similar to what took place in 2008. If that does not occur gold can be bought after every pullback or correction.
The United States Oil Fund LP (ETF) (NYSE:USO) finished the week higher by $1.76 to $34.04. The USO bounced off the $31.60 support level last week and continues to remain in the long sideways base since June 2009. Should the $31.60 level fail to hold the $30.00 area would be the next support level on the weekly chart. Technically the USO is still in a weak position on the weekly chart as price is still trading below the weekly 20 and 50 moving averages. It is important to always remember that oil is very sensitive to geopolitical events, adverse weather, and the U.S. Dollar.
The U.S. Dollar Index gained $1.63 for the week closing at $86.76. While the dollar remains near the $87.00 – $87.50 resistance level it is starting to build a small base and remains strong on the charts. The rally in the dollar that began in late November 2009 is now is now 27 weeks long. There will be resistance every point higher from here for the dollar with the next major weekly resistance area around the $90.00 level. Simply put when the dollar rises the Euro currency CurrencyShares Euro Trust (NYSE:FXE) declines and the markets deflate. The opposite is true when the dollar declines the markets inflate and trade higher. This chart PowerShares DB US Dollar Index Bullish (NYSE:UUP) is one of the most important charts in the market right now as the movement in the dollar dictates every move in the stock indexes.
