October 1, 2005
The S&P 500 consolidated in a narrow band for most of the week before a strong blue candle on Thursday signaled another rally to test resistance at 1245.
In the long term we can expect strong resistance at 11000 and strong support at 10000, with the index ranging between the two levels for some time, restraining advances on other US indices.
Long yields continue to climb above 4.0%, while short (13-week) yields consolidate below 3.5%. The yield differential (10-year T-notes minus 13-week T-bills) has recovered somewhat but remains below 1%, indicating a flat yield curve, with negative long-term implications for the economy.
We may be witnessing the start of a "managed" rise in long yields. How smooth the process is will depend on the level of co-operation between the Fed and Asian central banks who are major holders of treasuries.
New York: After a short (bullish) pull-back, spot gold rallied to $468.70 on Friday. The metal appears headed for an attempt on $500.
The FTSE 100 is testing resistance at 5500, the target of the cup and handle from two weeks ago. Twiggs Money Flow (21-day) continues to signal accumulation.
The primary trend is upward. Expect resistance at 6000 and 6900.
The Nikkei 225 continues its bull market rally with strong volume and very short retracements. The steepening curve warns that the market may be headed for a blow-off: an upward spike followed by a sharp correction.
Twiggs Money Flow (21-day) rose to new highs, signaling rapid accumulation. The long-term target for the breakout remains: 12000 + (12000 - 7600 [the April 2003 low]) = 16400.
The All Ordinaries broke out from last week's consolidation with a strong blue candle on Monday . Profit-taking at the 4600 target was evident on Tuesday  and Wednesday  with higher volume and weak closes. A bullish sign followed when sellers were overcome without further retracement and Thursday displayed another strong blue candle . Friday, however, signals further profit taking, with a close back below 4600 on strong volume . A close below the low of  would warn of a secondary correction.
The All Ords is in a strong primary up-trend, but always keep an eye on the S&P 500.
~ Henry Louis Mencken