February 5, 2005
The Dow Industrial Average has respected support at 10350, reversing into an up-swing after a breakout above 10500. The index consolidated Thursday below resistance at 10600 before a further breakout above 10600 completed the (intermediate) reversal. This is a strong bull signal. Look for a pull-back that respects support at 10600 to add confirmation.
Twiggs Money Flow (100-day) has crossed above its signal line.
Twiggs Money Flow (21-day) is rising but still below the signal line.
The Fed sprung no surprises at its recent meeting, raising interest rates by another quarter per-cent, consistent with the last 5 meetings. Market fears of a steep rates rise appear to have eased and the yield on 10-year treasury notes remains soft, heading down for another test of support at 4.00%.
Expect support at 4.00% to hold. A fall below support, though unlikely, would be bearish for equities.
The yield differential (10-year T-notes minus 13-week T-bills) continues to fall, reaching 1.65% this week. Below 1.0% would be a long-term bear signal for equity markets.
New York: Spot gold has broken through support at $420 at the base of the recent consolidation, closing down at $414.00. Expect a test of support at $400 and possibly the 1-year low of $375.
Reversal back above $420 would be a bull signal (bear trap - price reverses back above support).
The bull rally on the All Ordinaries continues. Selling pressure dissipated on Monday  with a close back above 4100 on normal volume. This occurred again on Wednesday to Friday, with increased volume signaling distribution but the index still closed higher on each of the three days. Short pull-backs as at  and  signal a strong bull market and we can expect further gains.
until it is considered invulnerable,
whereupon it is ripe for a bust.
~ George Soros