Flight to safety
By Colin Twiggs
August 2nd, 2011 11:00 p.m. ET (1:00 p:m AET)
The Dow Jones Industrial Average closed below support at 11900, warning of a primary down-trend. Bearish divergence on 21-day Money Flow has indicated this for some time. The S&P 500 displays a similar breach and follow-through below 1250 would confirm.
* Target calculation: 12000 - ( 12800 - 12000 ) = 11200
Spot gold broke through its target of $1650/ounce*. Expect a test of the upper trend channel.
* Target calculation: 1550 + ( 1575 - 1475 ) = 1650
Brent crude remains in a narrow range between $116 and $120/barrel. Negative outlook on the global economy is likely to weaken demand for crude and another test of primary support at $104 is likely.
* Target calculation: 105 - ( 120 - 105 ) = 90
The euro is headed for another test of primary support at $1.40, but 21-day Momentum oscillating in a narrow range around zero indicates no clear trend. In the long term, breakout below $1.40 would offer a target of $1.30*.
* Target calculation: 1.40 - ( 1.50 - 1.40 ) = 1.30
The Swiss franc spiked through its upper trend channel against the dollar. Short retracement of 2 to 3 days would indicate an accelerating (exponential) up-trend.
The pound is testing support at $1.625; failure would signal a correction to primary support at $1.59. Long term, penetration of the rising trendline and bearish divergence on 63-day Momentum both warn of reversal to a down-trend.
* Target calculation: 1.60 - ( 1.67 - 1.60 ) = 1.53
The dollar is consolidating above medium-term support at ¥76.50. Failure of support would indicate a test of ¥75*. Declining 21-day Momentum, while below zero, confirms the strong down-trend.
* Target calculation: 80 - ( 85 - 80 ) = 75
The Loonie broke below its trend channel against the greenback. Follow-through below $1.04 would confirm another test of primary support at $1.01.
The dollar is consolidating in a broadening wedge against the Rand. The long-term trend is down, but strong support at R6.50 and rising 63-day Momentum suggest reversal to an up-trend. Breakout above R7.00 would confirm.
* Target calculation: 7.00 + ( 7.00 - 6.50 ) = 7.50 or 6.50 - ( 7.00 - 6.50 ) = 6.00
The Aussie dollar broke support at $1.25 against its Kiwi counterpart, continuing the decline towards its target of $1.22*. Falling 21-day Momentum strengthens the signal.
* Target calculation: 1.30 - ( 1.38 - 1.30 ) = 1.22
The Aussie dollar reversed below $1.10, falling sharply as investors retreated to safer havens. Breach of support at $1.08 indicates a test of primary support at $1.04 against the greenback.
* Target calculation: 1.10 + ( 1.10 - 1.05 ) = 1.15
Essentially, the structure announced today allows both political parties to talk about reform without actually changing anything. To underscore that point, the deal involves less than $25 billion in immediate cuts! This is less than a rounding error in a $3.8 trillion dollar budget. This is politics as usual.
~ Peter Schiff commenting on the latest debt deal