U.S. equity markets posted weekly closing reversal tops indicating the possibility of the start of a 2 to 3 week break. A worse than expected U.S. Durable Goods Report triggered today’s sell-off, but the high for the week was posted shortly after the Fed FOMC announcement on September 23rd. Investors are selling stocks on the belief that prices are too far ahead of economic conditions.
U.S. Treasury markets closed higher for the week led by a sharp rise in the December T-Bond. News that the Fed is going to extend its asset buyback program into 2010 helped give Treasuries an initial boost earlier in the week. Weakness in U.S. equity markets encouraged investors to park their profits in the safety of the Treasuries.
The U.S. Dollar overcame early weakness to post a weekly closing price reversal bottom. This move doesn’t turn the trend to up, but is a strong indication that the Dollar will rally for 2 to 3 weeks. A follow-through rally through .7734 next week is needed to confirm the reversal bottom. The main trend will turn up following a breakout over .7997.
December Gold and Silver finished the week lower because of the stronger Dollar and the drop in demand for risky assets. The main trend is now down in gold on the daily chart. The weekly chart indicates a move to the 975.00 is possible before fresh buyers come in to support the market. Based on the developing chart pattern, there is still the possibility of a rally back to 1005.00. December Copper also looks as if it is developing a major top.
December Crude Oil finished lower for the week. The bearish fundamentals indicate more downside potential next week. Earlier this week, it was reported that ending inventories rose unexpectedly because of a huge drop in demand for crude oil and gasoline. A stronger Dollar is also likely to keep downside pressure on the energy complex.
