By Colin Twiggs
April 5th, 2011 11:00 p.m. ET (1:00 p:m AEDT)
Gold broke through $1450 as the surge in crude oil raised inflation fears. Expect an advance to $1500* in the medium term; the long-term target is 1550*. Twiggs Momentum (21-day) holding above zero indicates trend strength. Failure of short-term support at $1410 is most unlikely, but would warn of another correction.
* Target calculation: 1440 + ( 1440 - 1380 ) = 1500; 1430 + ( 1430 - 1310 ) = 1550
A 21-day Twiggs Money Flow trough above zero on GLD signals buying pressure.
Silver continues in a strong upward trend channel, leading gold higher. Twiggs Momentum high above zero confirms trend strength.
* Target calculation: 36.50 + ( 36.50 - 33.50 ) = 39.50
The US Dollar Index respected the upper trend channel, suggesting a swing to the lower channel. Failure of short-term support at 75.20 would confirm. Twiggs Momentum holding below zero indicates a strong down-trend.
* Target calculation: 76 - ( 81 - 76 ) = 71
Nymex WTI crude broke through resistance at $106/barrel, continuing the steep rally. The strong rise is boosting gold in the short/medium-term. Breach of short-term support at $106 would warn of an equally sharp correction back to the long-term trend line, however, typical of a blow-off.
* Target calculation: 105 + ( 105 - 97 ) = 113
The CRB Commodities Index is testing resistance at 365; breakout would indicate a test of the upper trend channel. The Australian Dollar broke through resistance and is likely to surge ahead, lifted by strong commodity prices.
The euro is consolidating in a narrow range below the band of resistance at $1.42 to $1.43. Breakout is likely, and would offer a long-term target of $1.54*. Twiggs Momentum holding above zero indicates a strong up-trend.
* Target calculation: 1.42 + ( 1.42 - 1.30 ) = 1.54
The pound is testing resistance between $1.63 and $1.64. Upward breakout would offer a long-term target of the 2009 high at $1.70*. Completion of a Twiggs Momentum trough above the zero line would confirm trend strength.
* Target calculation: 1.63 + ( 1.63 - 1.53 ) = 1.73
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A surge in quantitative easing by the Bank of Japan has supported the stock market and weakened the currency, relieving pressure on Japanese exporters. The dollar broke above ¥84, warning that the primary down-trend is ending.
* Target calculation: 84 + ( 84 - 80 ) = 88;
The Aussie dollar is retracing to test its new support level at $1.02. Given the surge in commodity prices, respect is likely and would confirm the primary advance to $1.06*.
* Target calculation: 1.02 + ( 1.02 - 0.98 ) = 1.06
A new form of inflation is increasingly described in the blogosphere. It better explains the pricing paradox Mr. Bernanke has failed to embrace. It's called "biflation."
Everything you already own — a house, a car, a stock portfolio — has rapidly declined in value. Everything you actually need to buy — food, gasoline, medicine, education — is going up.
~ DJ Newswires' Al Lewis