Adam Hewison: Here’s the Bottom Line, Nothing Has Really Changed

The light volume rally that exceeded everyone’s expectations in the equity markets has finally come to an end. We were surprised, like many traders, just how far this rally extended. The major trends always win out in the end, and the major trend for the equity markets, the oil market, the silver market, and the Reuters Jefferies CRB index are all still negative longer term. The long term trends came into play and proved how important they are in the scope of trading.

This morning I saw that Wall Street insider Raj Rayaratnam was sentenced to 11 years in prison for his insider trading. I’m all for putting people behind bars that break the security laws of the United States. The security markets have no place for individuals like this.

I’m also for putting incompetent politicians who waste our money behind bars. There should be consequences for their actions. When you have Senator Dick Durbin go on the Senate floor and say to everybody to pull their money out of Bank of America, it is an irresponsible statement and very dangerous for our fragile economy.

The reason Senator Durbin said what he did on the Senate floor, is because he cannot be prosecuted. Had he made that statement in a town hall meeting or any kind of public meeting, Bank of America could and should sue him. You can’t have politicians denigrating businesses who are elected officials. Unfortunately, most of these officials have zero shame and certainly would not resign over something like this.

Here’s the bottom line, nothing has really changed, the country and the world is in a heap of trouble and that just can’t be swept under the rug and forgotten about.

Let's look at the action in the U.S. Dollar for Thursday.....

The dollar index is at the lower levels of the Donchian trading channel and is also in an oversold condition. Given the fact that the Chart Analysis Score is +55, we expect to see a rally and recovery most likely to the 78.50 level. We continue to be friendly to this index and want to hold long positions with money management stops. This index is coming from a large energy field that is capable of carrying it much higher. Intermediate and Long Term traders should maintain long positions with the appropriate money management stops in place.

The December U.S. dollar index closed down 4 points at 77.22 today. Prices closed nearer the session low again today and hit another fresh three-week low. Significant near-term chart damage has occurred recently to now suggest a near-term market top is in place.

Monthly Trade Triangles for Long Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short Term Trends = Negative
Combined Strength of Trend Score = + 55

Weekend Video Update: European Sovereign Debt Problems Spill Over into Global Equity Markets

Once again, the problems with sovereign debt in Europe  spilled over into the global equity markets,  and in particular the bank stocks. Europe is “the tail that wags the dog”, and in this case,  it’s the world.

Weekend Video Update Here.

For the 4th straight week, US equities closed lower and under heavy selling pressure.  Gold on the other hand soared to new highs, on fears that the sovereign debt crisis is escalating and getting totally out of hand. (It’s already out of hand).

With world equities coming under pressure crude oil was not immune to the potential of less demand for this commodity. With that in mind crude oil slipped 3.6% for the week.

So there you have it, the trends continue,  and these trends are likely to continue in the near future.

Now,  let’s go to the weekly charts and see what happened last week in the major markets according to our Trade Triangle technology.

S&P500: change for the week: – 4.68%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short-Term Trends: = Negative
Combined Strength of Trend Score: = – 100

Dollar Index: change for the week: – .77%
Monthly Trade Triangles for Long Term Trends: = Positive
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Positive
Combined Strength of Trend Score: = + 55

CRB Index: change for the week: + 2.97%
Monthly Trade Triangles for Long Term Trends: = Negative
Weekly Trade Triangles for Intermediate Term Trends: = Negative
Daily Trade Triangles for Short Term Trends: = Negative
Combined Strength of Trend Score: = – 100

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