Dollar against euro: The support of 1.25 is ready to try to stop the bearish pressure

The currency of the European Monetary Union has continued to demonstrated its weakness, especially after the bail-out approval that Greece is waiting for. This final decision would be key to prevent the Hellenic country from having to declare a default. However, despite the strong support that the other members of the European Union has revealed and the remarks of the President of the European Central Bank, Jean Claude Trichet, at the moment there is not guarantee that other Mediterranean economies could avoid a financial contagion.

This chart, which shows the evolution of the euro against the American dollar expresses in some way the overall situation we have just described. As we analyzed in our last report, http://timelymarkets.blogspot.com/2010/03/euro-against-dollar-european-currencys.html , there was a serious likelihood that the european currency could reach the level of 1.30. The next sessions involved a brief recovery, after a rebound to the resistance of 1.37. But, the aforementioned events brought about a sharp collapse. Even the strong support of the 1.30 has been unable to offset such a intense bearish movement.

The scenario for the euro remain downwards. The next support, placed in 1.25, should concentrate new bullish interest. Because of that, this area could be a strategic level to open long positions for those investors who are less risk averse.

The recommendation is to buy euros at the zone of 1.25. We´d close this position as long as it hits again the level of 1.30 -1.31. Stop loss in 1.23.

The Nasdaq Composite will have to struggle to keep a crucial support

Last Friday, Wall Street´s main indexes tumbled during the session´s last hour. This fact involves a higher level of technical deterioration.

So Far, North American Stocks Markets have avoided the contagion from other economies, mainly European countries, where a wide range of Indexes have collapsed, especially after the increasing financial problems that Greece has revealed in the last weeks. The credit rating downgrades that some Mediterranean countries such as Portugal and Spain received from Standard &Poor's aggravated their poor technical situation.

The Nasdaq Composite is going to play a key role this week. The technological Index has soared a 100% since March 2010. It currently keeps its primary rising trendline. By contrast, the secondary upward tendency could be threatened if eventually the support of 2.450 points is broken down.

The potential head-and-shoulders pattern that prices are starting to develop is a second negative element. At the moment, its technical situation is not dangerous enough, but if the neck line (wich coincides with the level of 2.450 points) gets lost, this movement could jeopardize its short-term rising structure.

The recommendation is to sell if prices break the level of 2.430 points. Stop loss in 2.535 points.

Dow and Dax shine among Securities markets, but they reach their goals

The Dow Jones and the Dax have demonstrated so far their resilience among the most representative worldwide Stocks Markets. As their charts show, they have been able to maintain their upward tendencies during the past two months, despite the general weakness which many Securities Indexes have been immersed in.

Nevertheless, their technical situation has begun to deteriorate, which can led both of them to look for lower goals. However, the strategy remains unchanged as it should focus to watch over the first supports: 10.960 and 6.140 points respectively.

The recommendation for the German Index is to sell if prices finally break the support of 6.140 points. Stop loss in the level of 6.350 points.

As for the Dow Jones the recommendation is to sell if prices break the level of 10.940 points. Stop loss in 11.250 points.

Dow Jones and Dax: Markets correction consequences

Last Friday alleged fraud accusations against Goldman Sachs brought about a significant correction in the Stock Markets, whose technical consequences have differed if we compare both North American and European main securities Indexes.

For instance, the most representative German Index, the Dax, has experienced a short-term scenario change towards a more bearish situation. In fact, its accelerating line is beginning to undergo a bearish pressure increase. As a result, its rising structure can be seriously damaged. The significant decrease that European Stocks suffered last week was, on the one hand, the result from a evident overbought situation that technical indicators had begun to show and, on the other, an excuse that investors had been looking for during the last sessions to make a profit-taking movement.

So far, it´s unclear which the extend of the correction could be. It will depend on the 6.140 support resilience. If it eventually can´t withstand the selling pressure, the accelerating trend will be considered as definitely lost. In that case, the decrease goal would be its primary rising trend, which passes by the level of 5.900 - 5.750 points. By contrast, if it concentrates enough buying interest, its short-term rising structure could be re-built again.

The recommendation is to close the long strategy if prices finally break the support of 6.140 points. Stop loss in 6.300 points.

The Dow Jones has demonstrated so far a healthier situation that European indexes. In fact, the 14% decline that the aforementioned banking investment firm underwent on Friday didn´t interrupt the rising movement that the most popular North American Index has been carried out since the beginning of February.

However, the fall was so abrupt, that a more intense falling technical movement could be unleashed in the coming sessions. To assess the likelihood of such a significant fall is very important to watch over the level of 10.950 points (whose role is absolutely key)  and secondly, the support of 10.850 points (by far less significant, although it should theoretically be more resilient).

The recommendation is to open short positions if prices break the level of 10.800 points. Stop loss in 11.150 points.

Coca-Cola: The 56-dollar resistance break-up would confirm a rising scenario

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The world´s largest beverage company seems to stay on a very quiet, even lethargic, movement. Its outlook appears to be weaker if we compare it with the Dow Jones´ behaviour, which this stock belong to, because, as the most popular Index of the New York Stock Exchange has been able to overtake its 2010 high level, which was touched by the 20th of January, Coca-Cola has remained very far from its analogous zone.

The main reason for this seemingly lack of dynamism should be found out on the robustness of the 56-dollar resistance, which has concentrated too much selling interest. This level has eventually become an impregnable fortress for the bullish side. Therefore, it will need a consistent effort to be hit.

However, despite the short-run scenario difficulties, this security remains upwards from a long-term perspective. The key technical element continues to be its 200-session moving average, which is a very reliable statistical element for the current analysis. In fact, since this lagging indicator was overtaken by the prices by the end of May 2009, the most logical strategy has been to keep long positions. Even the first quarter of 2010 correction was unable to invalidate the hypothesis that a new upward cycle had begun.

To sum up, Coca-Cola shows a favourable outlook for a long position strategy, despite its short-term sideways situation.

The recommendation is to hold. Stop loss if it breaks the level of 52.40 dollars. 

Google can be willing to make an upward impulse

Google has spent most of the past two months in a sideways movement. This short-term range - bound technical situation doesn't imply that the Internet search technologies company is apparently showing weakness symptoms. In fact, we must take into account that Google has risen about 129% since November 2008.

Having said that, its current lateral move seems to be a reply to its previous spectacular recovery. Because of that, its quiet technical situation could be a strategy to consolidate its substantial prices increase. Thus, its short-term intention would be to try to make a new upward impulse to reach higher levels.

Therefore, Google's scenario remains positive. There are at least two kind of elements which support this hypothesis:

First, the resilience and continuity of its rising tendency. Despite the prices correction between the beginning of January and the 25th of February 2010, when the Internet-based services and products corporation fell from the area of 629.50 dollars to the level of 520 dollars, the main uptrend has always remained intact.

Secondly, the supports of 520 and 550 dollars should supposedly play a crucial role in the coming weeks. If they have been able to prevent further falls, they could continue drawing new buyers around these levels. 

Consequently, this group of technical parametres could eventually bring about a new upward impulse, as long as the bearish positions become exhausted. 

The first obstacle is the resistance of 590 dollars. If finally this level is overtaken, the next goal would be the maximum price reached in 2010, that is 629.50 dollars.

The technical recomendation for Google is to buy. Stop loss in 519 dollars.

Citigroup has developed successive falling and rising trendlines

Citigroup´s debacle has been one of the most representative amongst the Financial securities, which in 2008 underwent a severe correction. The International Financial conglomerate that competes in corporate, consumer and investment banking, reached at the end of 2006 the level of 57 dollars in the Stock markets. However, by the beginning of March 2009, its shares price was just one dollar.

Since then, it has experienced a significant recovery (about a 332%) mainly as a result of the North American Government's $700 billion bank bailout. Nevertheless, its increase has not been homogeneous at all. In fact, if we look at its one-year chart, we realize that there have been successive upward and downward movements. Despite this apparently unclear technical situation, Citigroup has formed three consecutive supports (1.00, 2.20 and 3.10 dollars) which reveals a gradual technical enhancement.

The most relevant feature of the short-term scenario is its upward trendline which began in the support of 3.10 dollars. As long as it remains intact, coherence demands long positions, despite the fact that prices can face some correction in the coming sessions.

The recommendation is to buy. Stop loss in 3.80 dollars.

Dow Jones vs. Oil: Their positive correlation remains.

This chart shows the positive correlation that the oil has kept with the Dow Jones Index for the last two years. Both of them have shared the same falling structure and they are equally developing their respective uptrends.

However, in March 2010 it has emerged a substantial difference between Wall Street´s most representative Index and the dubbed "black gold". As the Dow Jones has been able to overtake the former resistance of 10.750 points, which was reached by the twentieth of January, the commodity has appeared to be too weak to go through its equivalent level. So far, the area of 84 dollars has behaved as a difficult hurdle to be cleared.

The technical situation analysis allows to establish a hypothetical scenario for the coming weeks: if the Dow Jones has been successful in achieving the goal of going through its analogous resistance, maybe the oil could do it as well.

The market is waiting for important economic data. On the one hand, on Wednesday it will be published the ADP National Employment Report, which is a measure of employment from an anonymous sample of about 500,000 U.S. business clients. On the other hand, on Friday, investors will know the non-farm payroll and the unemployment rate in United States.

Both of them could encourage or disappoint the current market sentiment, depending on the final figures. In any case, these data can play a crucial role in terms of knowing the result of the struggle that the oil keeps against the level of 84 dollars.

The technical recommendation is to open long positions if the oil overtakes the area of 84.80 dollars. It´s advisable to set a stop loss in 79.00.

Microsoft: Despite its slow pace, its primary structure remains upwards

Microsoft seems to have moved at a slow pace for the past two months if we compare with other Nasdaq´s securities, such as Cisco or Apple. In fact, its increase during this period (8%) has been considerable lower than these two companies, which have risen a staggering 20% and 22%, respectively. 

Despite this meagre rise, its technical situation remains bullish. As most stocks, its recovery began in March 2009. However, its most relevant moment took place two months later, by the beginning of May, when prices went through the level of 21.00 $. This break-up entailed a new upwards cycle and, consequently, the former downtrend eventually finished.

Therefore, Microsoft keeps its rising structure, which is represented in the chart by a primary tendency, whose slope is moderate (an angle of 18º). It´s remarkable the fact that at the end of 2009 the speed of its recovery increased significantly. This rhythm increase allowed this security to reach the level of 31.50 dollars before it could be expected. 

By contrast, in 2010 the company owned by Bill Gates has experienced two different moments: the first one, which involved a 13% decline, and the current short-term rebound, that is the technical element which a coherent strategy should be built on.

To summarize, investors should  take into account that Microsoft remains in a rising scenario, despite the fact that this year has not already recovered its higher levels. The mission for a short-term investor consists of watching over the first supports, placed on 28.00 and 27.50 dollars.

The technical recommendation is to hold. Stop loss in 27 dollars.

Apple: Prudence must be the strategy after an all-time high is achieved

The recovery that Apple Computers has experienced in the past year is really impressive.

Its behaviour is exactly the opposite to what had happened in 2008, when the collapse of the Stocks Markets had undergone an accentuation by the last quarter of that year.

Nevertheless, at the beginning of 2009, a tripple-bottom was formed around the area of 82 $, which confirmed a reversed pattern and, therefore, a cycle shift.

From that moment, the second quarter of 2009 began with a staggering increase for the securities of the American multinational corporation. Apple climbed around a 60% since March to May 2009. Nevertheless, its uptrend didn´t finished after this remarkable achievement. In fact, it continued to soar for the next ten months.

During the session of March 25th 2010 the computer manufacturer reached the level of 230.97 dollars, that´s an all-time high, which accounts for a 180% rise from a year ago.

However, this stock is beginning to reflect some exhaustion. The RSI is showing negative divergences, which could involve a significant short-term decrease. Besides, the channel bottom could behave as a strong resistance, which could interrupt such a enormous appreciation.

The technical recommendation is to sell at the current prices. Stop loss in 236 dollars.

Cisco: Bullish positions overpower a difficult resistance

Cisco´s movement confirms the significant improvement of Nasdaq´s main components. The supplier of networking equipment for Internet has been able to go through the difficult area of 24,80 dollars. It achieved this goal during the session of March the eighth, when the resistance was clearly overtaken. This movement strength assessment implies to evaluate a key data: the volume which came along the rise. The chart points out that this statistical data was specially high, compared to the 30-day moving average. Consequently, we can infer from this technical indicator, that the shift towards a more bullish scenario was validated for a mass of investors.


Anyway, we must not forget that the short-term way doesn´t lack obstacles. The next goal is the resistance of 27,80 dollars, which approximately coincides with the rising channel top.


The recommendation from a short-term perspective, is to maintain buying positions. Stop loss in 25,50 dollars.

Oil: Prices point out to the raising channel top

The oil upwards movement for the past three weeks has been coherent with its raising channel. As we analyzed in the two previous analysis, the prices could experience a rebound from this channel bottom. Our first goal was the level of 82 - 83 dollars, where there was a resistance which coincides with the top levels that this commodity reached by the beginning of 2010.

This objective has been achieved. From now onwards, the question is if it will be able to overtake this level to initiate a new impulse to 85-86 dollars. The reply to this dilemma involves an assessment of the short-term tendency, which began by February the fifth. So far, the yesterday correction has not damaged it.
Therefore, it remains a raising potential. Due to the fact that prices develop their movement in a recovery scenario, the new projection can lead the oil to the level of 86 dollars.

Our technical recommendation is to sell partially on the level of 82-83 dollars and to close definitely long positions as soon as oil reaches the goal of 85-86 dollars/barrel.

ebay: The resistances break involves a technical situation enhancement

Ebay has showed a perfect equilibrium for the past seven months, which has led it to design a perfect rectangular shape, a very tipical pattern that happens when there is a balance between bullish and bearish expectancies. Nevertheless, in March, the bullish strengths have overpowered in the short term scenario. Consequently, the new technical situation seems to be more appropriate for long positions. In any case, the rise has been extremely vertical. Because of that, some correction could appear in the next sessions.

The recommendation is to take advantage of a potential decline to buy stocks of "Ebay". Stop loss on the level of 23 dollars.

Euro against dollar: the goal is achieved

As we pointed out in our last analysis, http://timelymarkets.blogspot.com/2010/02/el-euro-no-da-senales-tecnicas-de.html ,the euro had no many chances to experience a sustainable recovery against the North American currency. A potential rebound could essentially be brought about by the positive divergences that the indicador RSI was showed by comparison with the prices. However, the dominant element within the short term scenario was the incipient downward trend which began to develop itself by the beginning of December 2009.

So far, its key role remains unchanged. Because of that, this falling tendency has been able to interrupt this apparently short-lived rise of the European currency.
In addition, the overbought situation of Momentum provides more evidence that the euro could be pushed down by the falling scenario.
Consequently, for the time being, there is not reason to abandon bearish positions. Therefore, our recommendation is to close long positions. We establish a stop loss in 1,3900 dollars/euro.

Dow Jones: Long Term Perspective

The North American Indexes have been more resilient to the news which have had a negative effect in the developed countries' Stocks Markets. As we have analyzed in previous strategies, many European indexes have lost their primary rising trendlines. They are currently trying to structure their move in order to be able to recover former upwards moves.

By contrast, the Dow Jones has been strong enough to keep its move up, after a brief period of consolidation. The most well-known Stocks index could offset the bearish pressure, thanks to the 9.850-point support´s strength.

Consequently, the long-term structure remains upwards. The recommendation is to maintain a long strategy. Stop loss in 9.700 points should be established.

Japanese Yen against US dollar: It remains the North American currency weakness

This chart shows the evolution of the Yen/US dollar for the past five years. We can realize that there is two clear stages: The first one, which starts by the beginning of 2005, leads the prices to the level of 125 yens per $. In August 2007 the rising trend is broken down. This moment implied a cycle shift, as the vertical yellow line points out. This feeling change had significant consequences from a technical point of view, because there was not other choice apart from opening short positions.
From that moment onwards, US dollar has tried to consolidate a reliable support which allows a new upwards cycle. So far, the level of 85.00-87.00 has behaved as a prospective candidate, but it´s too early to consider if it eventually will play this supportive role for a bullish strategy. We consider that it´s much more relevant to watch over a possible resistance of 94.00 break-up, which definitely would imply the downtrend end.

Our Technical recommendation is to open a long strategy just if prices break out the level of 94.50. The next goal would be the area of 101.50. Be aware that you should set a stop loss in this case in 91.30. Meanwhile, it appears to be more coherent to maintain a short position.

Debemos vigilar la reciente estructura alcista del Dow Jones

La nueva tendencia alcista recién inaugurada por el índice norteamericano http://timelymarkets.blogspot.com/2010/02/la-ruptura-de-la-resistencia-de-10350.html no ha quedado dañada, a pesar de la corrección de la sesión del 23 de febrero. De momento, la sobrecompra ha empezado a provocar la caída del índice y permanece el potencial correctivo. El Dow Jones podría dirigirse a niveles cercanos a los 10.000 puntos, pero, a fecha de hoy, la conclusión más positiva es la permanencia de la directriz alcista. La recomendación es mantener con stop loss en 9.980 puntos.

La ruptura de la resistencia de 10.350 puntos denota la fortaleza técnica del Dow Jones

Las divergencias positivas del indicador RSI han impulsado la recuperación del índice más popular de Wall Street. La ruptura de la resistencia de 10.350 puntos hace que el próximo objetivo sean los máximos de principios de 2010, en torno a los 10.750 puntos. No es descartable que la sobrecompra de otros indicadores técnicos puedan motivar alguna corrección puntual, pero en cualquier caso,se recomienda aprovechar dichas tomas de beneficios para abrir posiciones largas en el índice norteamericano.