Stock indexes off highs, but higher, Commodities continue down

gold0811b.pngCommodities continue to get pounded. The chart to the left is the continuous Chicago gold contract. You can see that once the trend turned down (blue lines) the market started to accelerate to the downside as the large funds that were all on one side of the boat quickly saw that the uptrend was getting a bit too popular, and they started running for the exits. This chart is very similar to the Euro Currency, and many other commodities and commodity related stocks. I have been warning of the commodity bubble bursting for months now, as well as the much advertised drop in the US Dollar coming to an end. Both scenarios are starting to play out, although the dollar is so far more in a sideways trend than a clear uptrend. At least it looks like it has stopped falling. It may form a basing period for a while before starting a sustained uptrend. I have no clue. I just know that when almost every trader, investor, and the general public can only talk about the dollar going down until the end of time, it is time to reverse course and get bullish. All the fundamentals will justify the current trend long after the trend has become exhausted and going the other way. Market discount the future, and will do so long before the fundamentals change. It is difficult being a contrarian because there is no comfort from the crowd. One has to go against CNBC and most of the analysts, and most of the time even the famous gurus.
qqqq0811.pngI am repeated the same, but updated, chart of the Nasdaq etf, the QQQQ, as I posted in the previous post, showing the fib retracement levels. Today price pushed above the upper fib level, but was unable to clear it. Momentum is now somewhat overbought, with a newly established uptrend as defined by the blue moving average lines. There is an area of resistance just above, as can be seen by the cluster of prices to the left on the chart, although those prices are probably to far back in history to offer much guidance. The upthrust left on the bar today, combined with somewhat overbought conditions, might make a pullback into the moving averages a possibility. If the momentum indicator can get out of overbought territory, and the moving averages hold price, there could be more to this uptrend in the coming weeks. Although I still view this as a bounce within the context of a bear market, at least for now, hence the July 4th bear still in the box in the upper left corner. The advance/decline ratio has improved somewhat by going sideways instead of down. But one would expect more with the rally in prices. Volume is still unimpressive. I show the Nasdaq rather than the S&P because the Nasdaq has been stronger to the upside, and held much better on the previous decline. The S&P hasn’t even quite made it up to its 50% correction level.