The last trading day on the month

It's January 31st! Investors and money managers like to use January's performance in the stock markets as an indication of how the rest of the year will play out. Frankly, I don't buy into that whole scenario. It's like the old caveat, "Past performance in not an indication of future results". This January really has nothing to do with January's of the past. The markets will do what the markets have always done and that is to outsmart the herd. So, be nimble, be flexible, and don't automatically assume anything when it comes to trading the markets.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

A SELL signal in Gold!

In case you haven't noticed, the 20-day MA crossed the 50-day MA on the daily chart for FEB GOLD on the last trading day of 2004. Since then, the market has broken the December low and is now trading below $430.00. All of this leads me to think that the longer-term trend direction has turned down. $400 is the psychological support and don't be surprised to see that support tested soon.

There seems to be a strong move out of small cap equities as the Russell 2000 is down nearly 6% from its peak on December 31st. It always amazes me how much time it takes for the market to move up and how little time it takes to give back the gains. 16 days of gains vanished in 3 short trading sessions. OUCH!

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Are Gold and the Dollar at a turning point?

With FEB Gold extending its decline which began in the first week of December, could it be that the yellow metal is ready to enter a full-blown bear trend? The outside day in the Dollar on the last trading day of 2004 has turned the first trading day of the new year into a dollar-buying spree. Alas, we've seen these one-day wonder rallies before and it's way too early to call an end to the bearish trend in the greenback. All one has to do is look at a daily chart of the US Dollar Index to realize that these brief, unsustainable rallies have been tremendous selling opportunities and nothing else. So, for all you diehard Trend Followers, remember this: The trend is your friend until the trend reaches the end. It's unlikely that the major trend in Gold or the Dollar are at a turning point. Be patient and let the market tell you its intentions.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

A Key Reversal to begin the New Year!

Today's markets are starting off the New Year with a significant uptick in volatility as the Stock Index futures bolted out of the starting gate this morning only to come up lame before they got to the backstretch! A key reversal day is certainly in the making and, if the MAR05 Dow futures can post a close below 10765, this could turn out to be the beginning of the end for stocks and it's only the 3rd of January! I know that sounds drastic but the technicals are at extremes here so stocks are certainly due for a pullback at the very least. We can't wait to see if the markets can gain their footing before the close.

Dale F. Doelling
Chief Market Technician
Trends In Commodities

Money makes people funny!

I have an old friend who is an attorney that used to say, "Money makes people funny". Well, I'd like to make one minor change to that statement. "CHEAP money makes people funny!." The era of low interest rates has allowed drastic changes to take place in Real Estate markets across the country. In this interest rate environment we have people buying homes that, under normal circumstances, would not be able to do so. That's not necessarily a bad thing in and of itself. The problem comes with the eventual downturn that will not only have these people losing their homes but ruining their credit in the process. 100% financing used to be the rare exception. Today, it is the rule. What goes around comes around and, unfortunately, I believe it's going to come around a lot sooner than people think. The reason I say that is because, in my opinion, the market is being manipulated by cheap money and, as they said in the movie, "Stupid is as Stupid does". You have people now using their homes like personal banks. They're stripping out equity at alarming rates to buy "stuff" like cars, boats, motorhomes and, yes, STOCKS!. They're margining their homes to buy STOCKS on margin. This, my friends, is a recipe for disaster! We'll continue to monitor this MARKET TREND and see if our assessment of the situation comes to fruition. But to us it feels like DEJA VU all over again!

Dale F. Doelling
Chief Market Technician
Trends In Commodities