Hello MarketClub members everywhere. It's Friday and a lot is going on in the markets. I believe that the sharp rally in the indices will fizzle out in the next five days and they will move into a trading range before heading lower. The reason I say that is because all three major indices are in what I call "thin air". What that means is that they are all above their 50% Fibonacci retracement levels and close to their 61.8% major resistance areas. Here are the areas for the DOW, NASDAQ and the S&P 500. DOW (INDEX:DJI) = A 50% Fibonacci retracement comes in around 16,750, a 61.8% retracement comes in around the 17,040 area NASDAQ (NASDAQ:COMP) = A 50% Fibonacci retracement comes in around 4,700, a 61.8% retracement comes in around the 4,818 area S&P 500 (CME:SP500) = A 50% Fibonacci retracement comes in around 1,970, a 61.8% retracement comes in around the 2,001 area The Fibonacci retracement levels were measured from both a close-only and a high low measurement and have been averaged out. All of the indices may go higher. However, the indices are in areas where they will begin to have problems before returning to the general downtrend that I see coming.
Crude OilBased on the Trade Triangle technology, crude oil (NYMEX:CL.J16.E) is now in an uptrend and has put in a bottom. It would appear as though there is potential for a double bottom which will be confirmed with a move and close over the $36.00 level. When that happens, I would expect crude to move to the $38-$40 level where it will run into a long-term downtrend line that should halt its upward momentum. Watch oil very closely today for a close over the $35.33 level.
GoldThe gold (FOREX:XAUUSDO) market broke out of the Triangle continuation pattern I showed in my last video. Look for gold to have resistance at the $1300 level from January 22, 2015. The bigger picture also portends to this market moving still higher with Fibonacci retracement patterns indicating the potential of seeing a 50% retracement of around $1482 an ounce. A 61.8% Fibonacci retracement would take spot gold up to $1582 an ounce.
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