Weekly outlook (indices, commodities)

2 May

STOCK INDICES

SPI

Bearish unless above 4849.

The losses continued last week, falling through the Fibonacci 38% retracement level from the February lows to the recent highs. The next key level - the 50% retracement at 4733 on the futures contract- was threatened on Friday night but is yet to be breached. The 50% level equivalent on the cash index is 4745. The 50% level also happens to coincide with the untested highs of February 23 at 4748. If this support does not hold next support is at the 62% level at 4662.

The outlook returns to bullish, at least in the short term, if the futures can move above 4849. In that event next support is then around 4930.

RES: 4849 4892 4930

SUP: 4745-4742 4662 4550

S&P 500

Bearish below 1176, bullish above 1216.

It is a grim overhang to this market that it hit 1220 on the cash index on April 26 which happens to be the Fibonacci 62% retracement level - to the point - of the entire downtrend from 2007 to 2009. The S&P500 is the best index to apply technical analysis for the US market in general and it has a habit of turning on 50% and 62% levels.  The fact that it has backed away from 1220 is an ominous sign that the rally that started in March 2009 may have ended.

A close below 1176 on the futures will signal a short-term double-top pattern with a minimum target at 1145. The latter level would also provide potential support from because it is last major highs of the uptrend reached in January this year. The only action to banish the bearish outlook would be a close above the highs of 1216 (futures) which would then give way to resistance at 1247, which is the vertical distance of the recent correction added to the January highs.

RES: 1207 1216 1247

SUP: 1176 1147-1145 1130

COMMODITIES

Gold spot

Bearish below $1123, bullish above $1161.

Gold finally made a sustained move above the key level of US$1161. That level was not only an old high from January but also the 62% retracement level from the all-time highs to the correction lows of February ($1226 – $1043). Having cleared that level there is now no previous chart levels acting as resistance before the all-time highs of $1226.

Any retreat from current level is likely to find support around $1161 – as resistance turns into support. If it fails to hold that level, next support is at the correction lows of $1123.

RES: 1194 1226

SUP: 1161 1146 1123

Crude Oil

Bullish unless below $80.53.

Crude oil is flirting with the high of the uptrend that started in late 2008. Once clear of that level (at US$87.09 from April 6^th) crude has the potential to move another $6 to $7. That would give a next upside target around $93.50. However before it could get to that level there is important resistance around $89-$90. This is the 50% retracement level from the entire move starting at the highs of $147 in July 2008 to the lows of $32 reached in December 2008 and again in January 2009. Increased volatility as it approaches, or directly after it has touched this level, would be a danger signal.

If crude fails to travel higher and instead is sold-off from current levels, next support is at $80.53. A move below that level gives a next downside target around $73.

RES: 87.09 90.00 93.50

SUP: 80.53 73.00-72.43

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