Stocks down, dollar down, Chavez down

It looks like Chavez will only be in power for five years instead of fifty. Oil came off a few pennies on the news on the open, but was able to turn around to close slightly higher. I guess traders soon realized that between now and 2012 Chavez could try many times to become president for life. Even if the vote never goes his way, he could force the change. I’m surprised the voting machines weren’t rigged on this one.
The chart to the left of the Nasdaq 100/QQQQ etf shows the price action over the last couple of months. The two main trend indicators I use are the standard error bands based on a smoothed linear regression curve, as can be seen over the price bars with the dark red line. You can see the trend direction starting to roll over, and prices plunged through the mid-point some time ago and have now rallied back up to the mid-point. The blue lines are the Ehler’s mesa adaptive moving average, which is a little more timely in direction change, and can be seen still in a down-trend. The bottom indicator is the familiar double stochastic, plotted with a regression line and green and red dots when the black line changes direction and crosses through its regression line, which is the yellow line. You can see the red dot painted as a result of today’s price action. With prices stopping right at the regression line, the trend still down, and momentum turning back down, it looks like this rally might have run its course. The peak of the rally was also near the 50% retracement level of the entire down-move.

Gold made a little rebound, but still under $800 even in the rolled over February contract. Gold still technically in uptrend, and for the moment seems to be sitting on a point of balance, or maybe more accurate to say the trend is up with momentum down, and therefore in a struggle between bulls and bears, which could be easily knocked off that point of balance. The dollar was little changed. It needed a rest after its big dead cat bounce off the lows last week. The move off the lows has been similar to several of the previous dead cat bounces during this down-move. If it can create a larger swing this time, that would increase possibility of turn-around. Another possibility is a retest of lows, but with a smaller down-swing, and a larger up-swing on the recovery. This has been a very long and persistent down-trend and it will probably take quite a bit of work on the charts to turn this around. I am starting to hear more analysts talking about the possibility of the dollar being oversold. Really?! Did they finally look at a chart?

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