Financial Market Trends and Forecasts Update

November 1st's in depth analysis (Stocks, Dollar and Gold Bull Markets Inter-market Analysis) gave updated projections for key markets into the end of 2009 and early 2010 as summarised below:

Gold Targeting $1200 by March 2010 : $1,119 ($1,046) + 7%

Gold is performing strongly. The Bull scenario remains in tact though a near term correction targeting $1060 seems likely.

Dow Targeting 10,350 to 10,500 During December 2009 :10,270 (9,712) + 5.7%

Stocks continued their rally at the start of the week, with the S&P joining the Dow by busting the bear calls emanating form the October highs and achieving a Dow high for the week at 10,342, a touch away from the target zone.

Using mid prices of the target ranges gives a potential of +155 (10425) to the upside against -720 (9550) to the downside, therefore the potential risk far out weighs the reward as the quick analysis concluded following Mondays close, therefore for traders who are long it would be wise to bank profits, pending outcome of what looks like an imminent correction. Remember trading is risk/reward game, where the reward must always outweigh the risk to win in the long-run.

Looking wider a field, I see a series of international indices putting in a lower low during early November and now implying a lower high as well, this strengthens the view that 10,342 as a high potential of being a swing juncture and confirms long positions under these circumstances are risky and do require an immediate resumption in the up-trend to clear nearby buy triggers.

Dow Trading - The nearest SELL trigger is at 10160. The nearest confirming BUY triggers are at 10,310 and then importantly at 10,345. As mentioned earlier upside looks very limited where 10,345 would target 10,425 to 10,500. On the short side 10,160 first targeting 9950 to 9900.

USD Targeting 84 during December 2009 : 75.23 (76.36) - 1.5%

The U.S. Dollar scenario remains on life support. The previously stated buy trigger of 77.50 remains unfilled. Now a nearer Buy trigger at 77.00 has been generated by recent price action.