The NQ's top gets popped! But this train may be headed for trouble.

I talked about the intermarket relationship between stocks and Precious metals last week and pointed out that the NQ (Nasdaq 100) may have been putting in a quadruple top. That top is history, for now. You see, markets have a funny way of hurting as many people as they possibly can. I was focusing on the NQ because it has clearly been the best performer in 2009 of all the major stock indexes. The performance of the S&P and the DOW pales in comparison. Getting back to my analysis, the high in the June NQ had been right around the 1285.00 area in January, February and March. On Thursday the experiment blew up as the NQ broke out of the pattern and made an intraday high of 1310.75 and, more importantly, closed above the 1300 mark. The momentum traders jumped on this breakaway train and that's probably what propelled the NQ to its high of 1327.50 in early trading this morning. But wait just a minute here! The market is trading 20 handles lower as I write this and my expectation for a peak in the first 3 days of this week may just come to fruition. This could be the spark that lifts Gold and Silver off the mat and puts them back in the fight. The following chart on May Silver shows that the low that was made back on 3/18 (11.89 intraday) was most likely a panic selloff that provided strong support for this market over the longer-term. If stocks should begin to tumble, and this morning's action is looking weak, then Silver may be the market to be in. Silver could quite easily rally back to the February highs if investors start to smell a trap in the equities arena.



So, to recap, I remain SHORT the NQ, with the market now down 18.00 handles from Friday's close and, more importantly, below the 1300 level. If this top is for real the NQ will have to break support at 1293.25 on a closing basis. If this should occur, the odds are that the Precious metals will have already begun to show signs that the selloff is finished and that a new leg up is underway. Keep your eye on the MAY SILVER contract as we progress through the week. If the market should break further and begin to approach the $12.00 level I'll simply step in and BUY using the previous low at 11.89 as my stop on a closing basis. This could be the BEST opportunity for being long SILVER since the October lows at 8.65. You need to be ready to act because, as we all know, the best laid plans are worthless without action.

Good trading,

Dale F. Doelling, Chief Market Technician
Trends In Commodities

The information and comments contained herein are provided by Secure Future Financial Corporation ("SFF-CORP") and are for general informational purposes only. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Any reproduction or retransmission of this report without the express written consent of Secure Future Financial Corporation is strictly prohibited. Again, the information and comments contained herein is provided by SFF-CORP for informational purposes only. Copyright © Secure Future Financial Corporation.

Quadruple Top in NQ?

An abridged version of this article was posted on the Bullion.com blog on April 2, 2009.

The NQ futures contract (NASDAQ 100) made a quadruple top overnight when it rallied to just shy of the previous high made on 2/10 of 1285.25. This morning's high was 1284.00 and, assuming the market doesn't break out and close above 1285.25, this is as close to a sure bet as you'll get when it comes to trading the markets. I'm SHORT the NQ and will remain short until the NQ closes above the resistance that I mentioned. How does this affect the Precious metals markets? Let's look at Gold for a moment. We just had a higher initial jobless claims number this morning and the 4-week moving average rose again aslo. Does this sound like an improving economic condition to you? I'm sure you've heard the joke "How do you know when a politician's lying? His lips are moving!" One of the President's biggest campaign promises went up in smoke yesterday when the largest tax increase in tobacco taxes took effect despite Obama's promise not to raise taxes of any kind on families earning under $250,000. This is one tax that disproportionately affects the poor, who are more likely to smoke than any other class of Americans. Nothing has changed!

It's just after 8:30 AM on Thursday and the April Gold contract is trading down $12.00 at 914.10. I continue to like Gold in the low 900's but with the Employment report set to be released tomorrow morning at 8:30 AM I am compelled to wait until that number is released before I commit to the long side once again.

If you look at the daily chart you can see that the %R oscillator is showing that the market is in a bottoming process. This means that tomorrow's number could put Gold on another rocket shot trajectory or it could mean that the market will break down to the previous lows of 3/18 or somewhere south of $900 and then turn and rally. There's really no way of telling unless you happen to be the one that compiles the Employment numbers for the Labor Department. Trading in front of the biggest economic report of the month is gambling, not trading. The facts remain the same on the economic front. We ain't out of the woods yet by any stretch of the imagination. As a matter of fact, we're still trying to figure out which way is North.

Let me leave you with this little snippet from P.J. O'Rourke, my favorite political satirist and Libertarian, when he was asked to evaluate President Obama's performance so far. "A dorm room bull session is in control of our country. Obama wants to change everything at once with no understanding of what those things are, no idea of how change happens in the real world, and no notion of the consequences of his ignorance." I couldn't have said it better myself!

Good trading,

Dale F. Doelling, Chief Market Technician

The information and comments contained herein are provided by Secure Future Financial Corporation (”SFF-CORP”). Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Any reproduction or retransmission of this report without the express written consent of Secure Future Financial Corporation is strictly prohibited. Again, the information and comments contained herein is provided by SFF-CORP. Copyright © Secure Future Financial Corporation.