Monday September 27, 2010 - 12:31:43 GMT
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Stocks, Gold Hold Steady Ahead of U.S.Openings
The lack of major economic reports seems to be limiting
movement to the upside in U.S.
equity futures this morning. Absent today is the driving force which helped
boost prices higher on Friday. We could
be looking at a slow start to the week since the final reading of U.S. GDP on
Thursday is likely to garner most of the attention.
Even without a strong overnight move, equity markets are
poised to finish September with one of their best returns on record. With the
markets at lofty levels to begin the week, donâ€™t be surprised by an early
morning set-back. Traders have become accustomed to buying dips rather than
chasing rallies, so today is likely to be no different.
The December E-mini S&P continued its rally last week,
bucking the seasonal tendency and pretty much assuring that September will be a
positive month. This index was choppy early last week, but eventually bullish
investors were paid off when the market rallied on Friday.
Last Tuesdayâ€™s Fed statement, hinting at more asset buying,
should have been enough to launch a rally, but investors were nervous about
buying strength, triggering violent swings. Eventually the bulls won the battle
as buyers defended the low for the week twice before finally pressuring the
shorts enough to give up their positions.
The charts are now indicating that 1154.50 to 1160.75 is the
next upside target for the December E-mini S&P 500. Based on the current short-term swing of
1117.25 to 1149.75, traders should watch for a pull-back to 1133.00 to 1129.75.
December Gold traded through $1300.00 last Friday for the
first time in history without much fanfare. There is really not much to talk
about until Gold does something to catch my eye. Currently the rally looks
pretty normal. Iâ€™m looking for either a spike up to indicate exhaustion or a
dramatic closing price reversal top. The swing chart indicates that $1318.10 is
the next upside target on October 4. A move to this price on this date will
mean the market is balanced. There is nothing exciting about that.
This morning a news report was released stating that Europeâ€™s central banks have all but halted sales of their
gold reserves. This ended a run of large sales each year for more than
The recent rush into gold over the past few weeks may have
been in anticipation of this event. What it essentially means is that a
significant source of supply has been withdrawn from the market. In addition,
it has given psychological support to the gold price. In other words, supply
will be tight and a major seller is gone.
Traders may not react to this news instantly because it may
have already been factored into the market, but it will play a significant role
during the next financial crisis. Gold is likely to continue to move higher
especially if the central banks turn into buyers.
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