Home > Uncategorized > General Update 2009/12/02: “Coordinated Multi-Asset Class Trend Decisions Likely This Week”

General Update 2009/12/02: “Coordinated Multi-Asset Class Trend Decisions Likely This Week”

▪  After all of the major divergences and what seem to be significant distortions in some cases, the trend decisions have all come around to being recalibrated at major supports and resistances. Both obvious and subtle fundamental influences are now likely to also play a role in what are likely to be definitive trend decisions. The most telling inferences to be drawn from the key decisions deserve immediate address; sometimes in the form of questions they raise.

▪  Are equities actually ready to rally from an already major rally since the March lows?  We do not want to get entangled in the ‘valuation’ or ‘ahead of itself (in the up trend)’ discussion, as there is not necessarily any particular ‘value’ that can be ascribed to a trend from a purely technical perspective.  Yet, within our ‘macro’ trend analysis, there is that key component which dictates there must be a least some reasonably credible fundamental rationale for any of the truly major technical projections, as otherwise they must be viewed as suspect. As we have recently revisited, this was the reason we were skeptical of the early 2008 equity market bottom. A similar psychology applies to the DJIA 12,500 Tolerance of major 12,300-350 resistance. This is because the next incremental resistance above that area is not until the 11,250 area, and 11,750-12,000 range overall. This captures the essence of current inferences from the ‘macro’ (combined fundamental & technical) analysis.

▪  Of course, this is also very important to the other asset classes equities might either encourage (Gold and energy) or depress (government bonds and especially US dollar.)  Equities may also impact the extended decision on Gold’s radical upside acceleration.  While it was clear from oscillator indications above 1,120 it could readily push up into the 1,180-1,200 area, the push above it is another matter entirely. Literally, as it represents an extension beyond conditions seen back in March 2008; in fact, not since December 1979 during the blowoff into the January 1980 high.

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