State of the Market August 2010
Daryl MontgomeryAugust 31, 2010
Copyright 2010, All Rights Reserved
The contents of this presentation are not intended as a recommendation to buy or sell any security.
Background Material for the Talk
• Moving Averages – 50-day, 200-day plus 10, 20, 30, and 40-day.
• Bollinger Bands – plus or minus 2 standard deviations from a ~20-unit moving average.
• RSI – relative strength index, 80-overbought, 20 oversold, 50 divides bearish and bullish
• MACD – moving average convergence divergence, zero divide bullish bearish, peak and bottom numbers variable
• DMI – Directional Movement Index, +DI (blue), -DI (red) and trend line.
Disconnect Between Economy and Markets
• Economy is clearly deteriorating yet markets haven’t had a big sell off yet.
• Similar picture happened in summer 2008 when Credit Crisis was accelerating.
• Market dropped sharply in the fall 2008 to catch up with reality.
• Either the market will fall apart or the economy will re-accelerate strongly.
• November election keeping market up.
Currency Summary
• U.S. $ bounced off 200-day, still in rally pattern.
• Euro still in bear pattern, hasn’t rallied to 200-day.
• Japanese Yen rally to 15-year highs against U.S. $ big story.
DXY Dollar Index: Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
DXY Dollar Index: One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
FXE Euro ETF: Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
FXE Euro ETF: One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
FXY Yen ETF: Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
FXY Yen ETF: One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
Metals
• Gold is bullish and rallying and trying to convincingly break to a new high.
• Silver still range trading and at top of range. Silver is economically sensitive.
• Mining stocks stuck have not gone to new highs and confirmed gold rally.
• Nova Gold (NG) 50-day MA trying to bounce off 200-day.
Gold ETF GLD Three-Years Weekly
10-40 Week Moving Averages and RSI, DMI, MACD
Gold ETF GLD One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
Silver ETF SLV Three-Year Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
Silver ETF SLV One-Year Daily
50, 200-Day Moving Averages, RSI, MACD, DMI
Mining ETF GDX Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
Mining ETF GDX One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
NovaGold (NG) Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
Nova Gold (NG) One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
Energy and Food
• Oil has been range trading for months. Charts in bear pattern since June. Seasonal weakness starts by September.
• Natural Gas looks like it is trying to test bottom from last year. Watch it!
• Wheat has had a big rally and food commodities have turned bullish.
Oil ETF DBO Three-Years Weekly
10, 40-Week moving average, RSI, DMI, MACD
Oil ETF DBO One-Year Daily
50, 200-day moving average, RSI, DMI, MACD
Natural Gas ETF GAZ Three-Year Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
Natural Gas ETF GAZ One-Year Daily
50, 200-Day Moving Averages, RSI, MACD, DMI
Food ETF DBA Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
Food ETF DBA One-Year Daily
50, 200-Day Moving Averages and RSI, DMI, MACD
Stocks and Bonds
• VIX has calmed down from its jump in the spring. Big rally off the bottom was extreme and unusual.
• Dow, S&P 500, Nasdaq and Russell 2000 had bear sell signals in July. DJT Monday.
• Interest rates have had sharp sell off globally. Looks like a liquidity trap.
Volatility Index VIX: Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
Volatility Index VIX: One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
DJIA Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
DJIA One-Year Daily
50, 200-Day Moving Averages and RSI, DMI, MACD
DJT Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
DJT One-Year Daily
50, 200-Day Moving Averages and RSI, DMI, MACD
S&P 500 Three-Years Weekly
10, 40-Week Moving Average and RSI, DMI, MACD
S&P 500 One-Year Daily
50, 200-Day Moving Average and RSI, DMI, MACD
Nasdaq Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
Nasdaq One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
Russell 2000 Three-Years Weekly
10, 40-Week Moving Averages and RSI, DMI, MACD
Russell 2000 One-Year Daily
50, 200-Day Moving Averages and RSI, DMI, MACD
30-Year Bond Interest Rate Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
30-Year Bond Interest Rate One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD
10-Year Bond Interest Rate Three-Years Weekly
10, 40-Week Moving Averages, RSI, DMI, MACD
10-Year Bond Interest Rate One-Year Daily
50, 200-Day Moving Averages, RSI, DMI, MACD