Weekly Outlook: 2014, April 6 - 13

MIB forecast for the week of April 7, 2014, Technical Analysis

The MIB broke higher during the week, and quite frankly never pulled back at all. It really seems to be broken out to the upside, and certainly is one of the more bullish markets that we see right now. It is the strongest of the European indices without a doubt, and that being the case we believe that the market will continue to go higher as the move has been so strong are ready.

The MIB tends to attract money when people are more confident as it is a peripheral market of Europe, which tells us that the European markets in general should do fairly well. The market broke above the 22,000 level, so we have cleared yet another psychologically significant handle. However, we are looking at the market that is relatively parabolic, so pullback wouldn’t be a big surprise. However, we fully anticipate the buyers stepping in en masse when the market pulls back and inevitably finds support.

That being the case, we feel that the market will be very supported at the 20,500 level, as there is a major cluster there. We essentially broke out above the 21,000 level though, so it’s very possible that the market pulls back to that level and find support as well. Regardless, a supportive candle is enough of a reason for us to start buying this market again as it certainly is bullish. With that, there is absolutely no way to sell this market, and it isn’t until we get below the 19,000 level that we feel even remotely interested in selling this market which of course has been one of the better performers lately.

Going forward, we expect to see this market head to the 25,000 level, but understand that it’s going to take quite a bit of time, so with that being the case we are buyers on dips and would add to our position longer term. By the time we get 25,000 or so, we would like to have a large position puts into the market as we believe in the trend of this obviously bullish index.

IBEX forecast for the week of April 7, 2014, Technical Analysis

The IBEX broke out during the week, clearing the €10,500 level, which was previous resistance. Because of this, we feel that this market will continue to go much higher, and pullbacks are buying opportunities in the Spanish index, as it is considered to be one of the more peripheral and therefore volatile markets. With that, we believe this market will continue to go higher over the longer term, as European markets start to look more and more healthy. A move to €15,000 ultimately will be the target we aim for, but understand that it will take some time to get there.

CAC forecast for the week of April 7, 2014, Technical Analysis

The Parisian index initially fell during the week after gapping, but managed to fill the gap and find €4400 to be supportive. That being the case, the market did in fact breakout from that point, touching the €4500 level. We believe that pullbacks at this point in time should continue to offer plenty of buying opportunities, as the buyers have certainly taken control this market recently. Going forward, we believe that this market will continue to grind higher, and are not dissuaded by the fact that the €4500 level offered resistance, as it is simply a large, round, psychologically significant number.

S&P 500 forecast for the week of April 7, 2014, Technical Analysis

The S&P 500 as you can see rallied during most the week, but he got beat back just underneath the 1900 level in order to form a massive shooting star. That shooting star of course suggests that there is weakness coming into the marketplace, but we see so much support at the 1840 level that it’s almost impossible to start selling here. With that, we are bullish long-term, but recognize that a little bit of consolidation may be coming. As far as support is concerned, we see all the way down to the 1780 level.

FTSE forecast for the week of April 7, 2014, Technical Analysis

The FTSE initially fell during the week, but as you can see the 6600 level offered enough support to push the market higher. It appears that the market is going to continue to grind in a slow upward manner. The bullish channel that we have been in since August of last year still appears to be intact, and as a result we fully anticipate this market to continue going higher. That being the case, any type of pullback should be a buying opportunity, and we believe that the market will eventually head to the 7000 handle.

Dow Jones 30 forecast for the week of April 7, 2014, Technical Analysis

The Dow Jones 30 tried to rally during the week, and although it did keep some of the gains, we saw a significant sell off at the 16,600 area. Because of this, we ended up forming a shooting star and we believe that this market may pullback a little bit from here. We don’t look at this is a selling opportunity though, we actually look at it as a continuation of the consolidation that we’ve seen for so long. There is a significant amount of support below, so at this moment in time we are looking for supportive candles below in order to start buying again, or a break of the highs.

US Dollar Index forecast for the week of April 7, 2014, Technical Analysis

The US Dollar Index initially fell during the week, but as you can see found enough support at the 80 handle in order to turn things back around and form a hammer. This of course suggests that the market is going to continue to find buyers, and we still believe that the consolidation area will be tested to the upside again. That has is looking for the 81.25 level at first, and if we can get above there, we believe that the more significant in the longer-term consolidation area which has resistance closer to the 84.00 level will be targeted. We have no interest in selling this market until we get below the 79 handle, something that does not look likely at the moment.

Silver forecast for the week of April 7, 2014, Technical Analysis

Silver markets did almost nothing during the week, so therefore there really isn’t a whole lot to look at when it comes to this chart. However, gold looks like it’s trying to bottom, so perhaps silver is to. We still see the $19 level is massive support, so therefore we can’t short being that close to it. On the other hand, we need to see at least a close on the daily chart above the top of the weekly candle here in order to start buying, which we think would release this market to go to the $22 level.

Crude Oil forecast for the week of April 7, 2014, Technical Analysis

The light sweet crude markets fell during the week initially, testing the $99 level for support. That being the case, the market found enough support down there to bounce and form a massive looking hammer. This hammer suggests the course of the market is going to go higher, probably stretching the market to the $105 level initially, or perhaps it just simply treading water in this general vicinity. Because of this, the market is certainly positive in our opinion, and we have no interest whatsoever in selling this market.

That being the case, we feel that until we get below the $97 level, it’s impossible to sell this market. That’s especially true with the hammer being formed, as it is such a bullish sign. We believe that ultimately this market will continue to drift higher, probably as high as $110 over the next several months.

Brent

The Brent market fell during the majority of the week as well, but did find the $104 level to be supportive. That area has been supportive in the past, and the fact that the candle formed a hammer for the week, suggests that we are going to have plenty of support underneath going forward. With that, we are much more bullish again, and we believe that we heading towards the $112 level given enough time. It isn’t until we break below the $104 level that we feel that this market starts to really lose its luster.

On top of that, the $102 level should be supportive as well, so really we don’t have a scenario where we feel comfortable selling. On top of that, it appears that the employment situation in the United States picking up, so that will drive demand for commodities in general. Going forward, we would expect pullbacks to continue to offer buying opportunities in a market that certainly seems to have a bid in it at the moment. However, all things being equal we actually prefer the light sweet crude market over the Brent market, as it is more favorable to North American consumption.

Natural Gas forecast for the week of April 7, 2014, Technical Analysis

The natural gas markets fell during the beginning of the week, but as you can see found enough support near the $4.20 level to turn things back around and form a pretty impressive looking hammer. With this in mind, we feel that a break to the upside could be a buying opportunity again, but we do believe ultimately that the natural gas markets will start to fall again. However, the technical analysis suggests that we are going to see continued buying, heading towards the $4.80 level more than likely if we can break to the upside.