Gary's Comments

The large percentage falls in international equity indices this week were due to large falls on a single day due to uncertainty surrounding Barack Obama's stimulus package for the United States economy. Despite this there are still short term up trends in equity indices around the world as shown in the table below.

The notable ones are the the FT-100 which is hanging onto its long term up trend by a thread. A fall below 3957 would change this situation. However, the Shanghai All Share Index (SSE-ALL) is rocketing ahead having risen 15% since SPA3 signaled Low market risk for the SSE-ALL on 5 December, 2008 and has risen by 6.39% in the last week. Will other equity markets follow the Chinese markets or the USA markets?

Overseas Markets

There are no signs of strength in the Oil price. Gold, Silver and Platinum continue in their up trends. Also, Copper has risen by 20% over the last 8 weeks, Tin by 15% and Lead by 37%. The early signs of a turnaround, shown by the SSE-ALL and metals prices, remain in tact however solid breakouts are required above 945 in the S&P500 and above 9090 in the Dow Jones indices to confirm a turnaround in US equities. On the downside, if the Dow falls below 7690 then the next target is 7450. Both of these support levels are weak so hold on tight if the Dow falls below them. The next support level thereafter would be 7200.

The economic background is one of mega-negative news. All those that have an opinion on market direction are talking about another step down in the equity markets. We need to be objective at all times and whilst the long term trend has not yet turned up there is also no technical evidence yet that we will have another step down. When we have a break out on the downside only then will I objectively side with the "another step down" callers.

Commodities

The S&P500 is currently trading in a sideways range between 800 and 825. A break below support at 800 or above resistance at 825 would indicate a short term move in the direction of the breakout. A breakout above 825 is required to take on the challenge rising above 945. The S40 is flattening out but still falling. Not since 1974 has the S&P500 been so far below its S200.

A medium term SPA3 Low market risk signal has occurred on the S&P500 due to the weekly SIROC rising out of the oversold zone (not shown below). The green icon on the daily chart below shows the Low market risk signal. If the S&P500 doesn't rise over the next week or two we could see a High market risk come quite rapidly as we did in early September last year. However, if it does rise........

Local Market Report

For SPA buys, a complete list is available to SPA customers by using the 'SPA Scan' under the 'SPA' pull down menu in Market Master X-ec. For Intelledgence buys, a complete list is available to Intelledgence customers in the Members Zone by choosing 'Intelledgence', 'Alerts'.
 

Share Wealth Systems provides more detail on all of the above items at our eUGMS. The eUGMs are monthly multimedia presentations available to Share Wealth Systems members only.