Sunday, February 26, 2012



The Commerce Department said Friday that new-home sales fell 0.9 percent last month to a seasonally adjusted annual rate of 321,000 homes. That followed four straight months of gains in which home sales rose 10 percent. The gains came after the government upwardly revised October, November and December's figures. December's annual sales pace of 324,000 was the highest in a year. Even with more sales, just 304,000 new homes were sold in 2011 -- the fewest on records dating back to 1963. And new homes are selling well below the 700,000-per-year rate that economists equate with healthy markets. But - not to worry just read Bloomberg as they reported the figures this way "Purchases of new homes in the U.S. exceeded forecasts in January after climbing a month earlier to a one-year high, more evidence the housing market is stabilizing. " graphs - RTTNews

The National Association of Realtors said on Wednesday existing home sales increased 4.3 percent to an annual rate of 4.57 million units last month, the fastest pace since May 2010. Sales were up across all four regions of the country, with the West recording the biggest gain -- an 8.8 percent increase.

As a result of ongoing geopolitical tensions (e.g. Iran) as well a spotty but generally improving global economy, the price of crude oil continues to trend higher. Since the end of September, the cost of one barrel of crude oil has increased by over $30. With oil prices trending higher, it is not all that surprising to find that gasoline prices are following suit. The average US price for a gallon of unleaded is up $1.87 per gallon since the financial crisis low. Over the past two months, gasoline prices have resumed their upward trend with an increase of $0.35 per gallon. There a couple points of interest from today's chart. For one, Middle East crises are often associated with major swings in the price of gasoline. Also, gasoline price spikes have often occurred prior to an economic downturn. In the end, gasoline prices have rarely been higher than current levels and considering the fragility of the current global economy, gasoline/oil prices are something to watch going forward.

This past week's top sectors.

This past week's indices - the small caps were slightly lower.

The monthly cash charts show that at the moment we are sitting at the high for the month across the board after a 5-month climb, except for oil which took a 2-month breather. The NASDAQ has broken above its multiyear highs while the Dow having broken last year's high is still under the high from 2007. The general market volume has not increased significantly and most traders look to volume as a demonstration of strength so are still treating this excellent rally as questionable so have missed much of these gains. Perhaps if the S&P 500 will move over last year's high and some volume will come in it will encourage more buying. You can see however that it's top Bollinger band is at 1425 and if reached may put at least a short-term stop to the rally. Oil is reaching its high from last year which is also right at the top Bollinger band at $115.

By midweek as seen on this 60 min chart, the indices had dropped to the lower Bollinger band as seems to happen every week, and became a good buying opportunity as they all then ran to the top Bollinger bands.

The monthly Dow chart a little bit longer term overview to show the look of the breakout so far and the declining volume each month.

The daily chart with RSI at 62 so not overbought and the top Bollinger band is at 13,179.

This 10 minute renko chart shows the morning dip on Thursday and the rise from about 9:30 and then the range the following day.

This Dow futures chart having short term Fibonacci projections on the right shows it has remained above the 161.8% projection. It now has at least a 60% chance of reaching the longer term 127.2% which is at 13,313.

This shorter term Dow futures chart with Fibonacci projections as shown. So the next trade above that 13,000 level may run right up to the 161.8% as shown.

Understandably with the rise in gasoline prices the transports have been falling this past week.

There was some movement into utilities this week as they bounced on Friday but are still contained in this range established in November.

The NASDAQ monthly also shows, decreasing volume though RSI is just at 63 and when it reached a high in 2007 RSI was over 70. Note that the histogram has just turned positive

The weekly chart with its 12 point gain.

On the NASDAQ 60 min chart there was a very brief touching or crossing of the moving averages but they remain on a buy and now one can use this lower channel trendline as a cautionary stop.

You may remember that the NASDAQ summation index is not terribly fast to respond so can have some whipsaws but do note that despite the new highs this week they have crossed over which is a warning and must be reversed pretty soon as often these crossovers can result in multi-week or month moves.

The past week it was a short one and there wasn't a big gain in the and this is but noticed that the number of new highs as shown on this moving average have not really increased in the past week. On the positive side the number of new lows have also not increased.

The NASDAQ 100 futures having broken above the 2600 level now has short term Fibonacci projection levels as shown.

Being a short term 15 min chart the moving averages can be a volatile but note that on Thursday the crossover came as the price moved above the downtrend line which worked out for a short term gain as it is inside this up trending parallel channel.

VIX again closed lower ending the week at 17.31.

The semiconductor index in a pretty tight range moving up and down closed down less than 2% remains above the trendline.

The New York stock exchange index on the top continued higher though in the bottom we see the number of new highs minus new lows have not turned back up significantly.

85% of all stocks on the New York stock exchange are now trading over their 50 day moving average.

The S&P 500 lazy the chart shows the price level back up to 2011 highs with the weekly RS I at 63. It is been a good run since did by at 1208. We updated the point gains from the summer of 2009 and generally the moves have been all along enough in duration that there was only one losing trade and the total amount is about 725 points or $36,000 per contract.

Last week two weeks ago we saw a test of the lower parallel channel trendline and again this week as well and the close was just at or under it. If we don't get a rally soon it will remain under it which doesn't necessarily mean a big drop but is a caution when it moves out of a channel. It's been in for two months.

This S&P 500 ultra long from our stock charts public page can also be used as an general market indicator even if you don't trade it. Watching the parallel channel trend lines and moving averages crossovers can spot the net potential points to take profits or to reverse trades.

On the ultra short side this would be a long trade if we do get a decent pullback.

As we saw with the Dow futures here the S&P 500 futures with some short term Fibonacci projections overhead that would come into play with a close over 1370.

A longer view of the monthly Russell 2000 chart and its three month in-a-row gains and about 42 points to go to get back to the all-time high.

The daily chart shows the tight range it is been in and overhead resistance.

And this Russell 60 min chart shows the February range.

The banking index has also been a non-starter lately had now is back close to its 20 day moving average.

With the price of gas going higher it was rather expected that retail may start some declines as we have often heard retailers speak of lower sales during times of high gasoline prices.

The Dow Jones world stock index gained two. One percent this week closing very near the underside of this formerly broken trendline which may provide resistance now.

The FTSE did gain half a percent this week and is a bit above the recent range but has yet to break this significantly.

The Shanghai exchange remained strong adding 3 1/2% this week making clearly above the more recent congestion and taking RSI back over 50. This is a positive move for the other markets in general with resistance now at the 50 week EMA which is near the top Bollinger band.

A little bit lower than the 50 week EMA above is the 200 day EMA at 2483 and this may give resistance as it did last summer. RSI on the daily chart is very near to 70.

We have often shown with stocks that as they approach a moving average and may have trouble breaking over it. They instead use the trick of just gapping up over resistance. We can see that our commodity ETF did just that this week, gapping over the 200 week EMA and closing the week up 3.9% on increased volume.

Crude oil which last week closed just act the downtrend line ran over at closing at $109. If it can hold the trendline been the logical first target will be the $114 level from last year.

This is a closer view on the weekly chart of oil. It is above the top Bollinger band but if it takes a bit of time it can push-up the bands like it did last year starting in late February. It does however need higher value as it had last time.

Here a gold futures chart with short term Fibonacci levels on the right and also the Fibonacci retrace levels from that 2011 high with the 78.6% retrace at 108, which may also give intermediate resistance.

Natural gas made that low six weeks ago with a quick test the following week as RSI had gone under 30 for a longer-term position this area is logical as the stop is nearby and if it is the start of the longer-term reversal obviously would be a good entry point. The histogram is only slightly negative and with only a little movement higher we will see a MACD crossover.a

Gold Closed above the 1767 resistance and now has it at 1804.

Here just a closer view of that gold. Of those gold levels.

On this gold futures chart you see the close just under the 61.8% retracement level.

Shorter-term gold futures shows the move to the 127.2% projection which gave enough resistance that it's been consolidating below that level. A close back above their could take it to the 161.8% as shown.

This gold ETF closed right at that top parallel channel line with some increase in volume but not is much as earlier in the year.

The GDX candlestick 60 min chart dropped below its 20 day MA but has held above the 50. Though this is short term as the Williams indicator above and the RSI indicator below their top lines.

As you know the GTX mechanical had shifted back to buy and each time when the signals change. We hope the trend lasts so we don't have whipsaws which eats away at the buildup gains and less we are taking partial profits. Along the way.

The silver monthly chart just points out the close right at resistance levels. However you'll note this move in the last couple of months has kept RSI above 50 and has moved the Williams indicator from just slightly below.

The silver futures chart with a break above the downtrend line but remains still under horizontal resistance. A close above 36 would then give a better than even odds that it will move to the 127.2% Fibonacci projection at $38.37.

It would be nice if silver does break above those levels as there is at least a six dollar gained now on our mechanical silver trade which went long at the turn of the year.

Last week copper looked cautionary as it closed below its 50 week EMA though it did put in a good 3.5% bounce this week.

Platinum however did break cleanly above resistance rising 5.3% this week.

Palladium was up 3.5% but it has not broken to new highs of the year. Do note that it did have increased volume this week.

The euro futures continued a rally closing above the 50% retracement towards its high from last October. It is now near the downtrend line worth watching for a break or a failure there.

If the US dollar were to rally the market may decline. Note that the Williams indicator is now below 80 and in past rallies it was at a similar location. Also notice that RSI though is at 37 and in the past it went below or near 30 before some major rallies. The dollar closed at 78.35 which is one penny under the earlier low this year which started a small rally. The other price to note is 78, as that is the 200 day EMA.

And the daily dollar futures charts looking quite week though Williams is oversold but RSI not so much. It is however just now under the lower Bollinger band. So watch as mentioned above for any quick trips to 78 is that may be a short term balance area.

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