Chopping Higher

The market has been up four consecutive days, and there are lot of skepticisms for this bear market rally to go higher. With options expiration coming up at the end of the week and a high level of skepticism, the market will continue to chop higher as hedges and protective PUTs are being close out. The SP500 is sitting slightly above the Nov 2008 low and the DJI is still approximately 300 points below its Nov 2008 low and the Nasdaq 100 has moved back into the trading range. The DJI, SP500 and Nasdaq 100 are only approximately 5% away from their next resistance level. The unwinding of the options and hedges will bring these indices to test their resistance level. If you are planning to go long, make sure to use tight stop as we are still in a bear market. I will continue to establish short term longs and hold off on any shorts until the market has reverted back into its down trend.








Gold

Ever since gold gave a false bull flag breakout, it has retraced to the trendline for support and it bounced off from the support level nicely. It is approaching the failed bull flag peak. If it can break above this peak, it could run up to the 1000 mark again.






Oil

The continuous future contract for crude is forming a saucer (rounded) bottom. The price has moved above the 50 SMA and the 50 SMA is sloping upward. The price action seems to indicate oil will go higher. Next resistance level is in the 50-55.