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

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