Weekly Outlook: 2014, May 04 - 11

S&P 500 forecast for the week of May 5, 2014, Technical Analysis

The S&P 500 initially fell during the week but found enough support below at the 1850 level to turn things back around. However, we have not broken above the 1900 level, a prerequisite for a buy-and-hold type of situation. On a daily close above that level, we are more than willing to buy this market as it should head directly to the 2000 level at that point in time. Pullbacks here should offer nice buying opportunities as we think the market will struggle to sell offer any real length of time.

FTSE forecast for the week of May 5, 2014, Technical Analysis

The FTSE had a bullish week as we shot well above the 6700 level during the week, testing the 6850 area. This area has been resistance previously, so on a daily close above that area, we are buyers as we believe the FTSE will continue to go higher at that point. Pullbacks on short-term charts can be buying opportunities as well, recognizing that the area will more than likely take a bit of momentum to get through. Breaking out above that area is a sign that the market could head to 7000.

Dow Jones 30 forecast for the week of May 5, 2014, Technical Analysis

The Dow Jones tried to rally during the week, indeed we did accomplish somewhat of a move higher, but we still see quite a bit of resistance at the 16,600 level. This is an area that should be overcome given enough time, but in the meantime we believe that a break above the top of the weekly range would be necessary in order to start going long. At that point time, we are very bullish of this market and recognize that it would be a breakout. On the other hand, a pullback from here should see plenty of support all the way down to 16,000.

US Dollar Index forecast for the week of May 5, 2014, Technical Analysis

The US Dollar Index initially tried to rally during the week, but ran into resistance at the 80 level in order to push things back down. That being the case, it appears that the market will find plenty of support below at the 79 handle as well, so having said that we believe that the market doesn’t have a lot of room to move lower. A break down below the 79 level does send this market crashing too much lower levels, probably the 75 handle for that matter. However, we expect to see supportive action in this area, so we think that the market will ultimately print some type a supportive candle that we can buy in this general vicinity. However, right now we are currently waiting to see what the market decides on what to do.

Silver forecast for the week of May 5, 2014, Technical Analysis

The silver markets fell during the bulk of the week, but as you can see found quite a bit of support as we get close to the $19 level. This is not a big surprise, as it has been an area where buyers have stepped into the market over and over. The fact that we formed a hammer from that level suggests that we are in fact looking at the “bottom of the market” currently. The silver markets of course will find solace in the fact that precious metals in general seem to be doing fairly well. Because of this, we feel that the market will ultimately bounce from here, and a move above the $20 level since this market looking for at least $22, and more than likely $25 given enough time.

On top of that, you have to keep in mind that silver is also an industrial metal, so there is the possibility that would decent economic number silver could continue to appreciate. When you look at the totality of the market, and the fact that we’ve so also hard, a bounce to the $25 level isn’t really that big of a stretch. It seems like a pretty big move from here, but at that point time we would merely be retracing and going back to the top of what could be considered a larger consolidation area. Because of this, we feel quite comfortable with this move and the fact that we keep getting long wicks on the candles for the past 3 and 4 weeks, suggests to us that buyers or some type of “smart money” is stepping into the marketplace and buying down here.

On the other hand, if we did break down to fresh, new lows, we feel that this market could fall apart and head to the $15 level given enough time. That move could be rather brutal actually, so it might happen quicker than you would expect. The market in our opinion though looks rather bullish and we will continue to expect good things.

Gold forecast for the week of May 5, 2014, Technical Analysis

The gold markets initially fell during the bulk of the week, but as you can see the $1300 level has in fact offered enough support to form a hammer for the second week in a row. Because of this, we feel that the market is probably going to rise from here, and quite frankly the fact that we replayed the previous week only as more credence to that idea. Obviously, there is quite a bit of support below the $1300 level, and it appears that the current consolidation area is starting to find more buyers than sellers as we could not come back to the $1200 area.

We believe currently that the market is consolidating between $1200 on the bottom, and $1400 on the top. The fact that we only fell half way this last pullback suggests that the tidy is starting to turn in the favor of gold. Because of that, we feel that the markets will ultimately reach towards the $1400 level again, and a move above that level would of course be very bullish. Quite frankly, we are more than willing to buy this market on a break of the top of the hammer, as we think the move to $1400 might be a little bit choppy, but once we get above there we think that the next move will be much quicker on the way to the $1500 level.

As far selling is concerned, if we broke through both of the hammers to the downside, that would be a very negative sign. We still think that there would be a significant amount of support near the $1200 level though, so selling is going to be difficult at this point in time. It really doesn’t matter though, even if you are bullish you have to recognize the fact that it could be a bit of a fight to go higher from here, and that the move might take some significant amount of time. Regardless though, we only see buying opportunities at this moment in the gold markets.

USD/JPY forecast for the week of May 5, 2014, Technical Analysis

The USD/JPY pair tried to rally during the course of the week, but gave back almost all of the gains after hitting the 103 level during the Friday session. This area was in fact a significant barrier, and it held true during this past week. However, we are starting head towards an uptrend line that could come into play. Because of this, we feel that a break above 103 is in fact going to be bullish enough to start buying simply based upon the fact that has held so well. Ultimately, we do believe that this pair goes higher.

USD/CAD forecast for the week of May 5, 2014, Technical Analysis

The USD/CAD pair fell during the bulk of the week, but as you can see found a little bit of support just below in order to form a candle that looks a bit like a hammer. Nonetheless, we think that this market is essentially stuck in the consolidation range that we’ve been in for some time now. This being the case, we feel that the market should continue to go higher from here, but breaking out above the top of the range is what we need to see in order to start buying again.

NZD/USD forecast for the week of May 5, 2014, Technical Analysis

The NZD/USD pair initially fell during the week, but found the 0.85 level to be supportive enough to push the market back around and form a hammer like candle. This candle suggests that we are still within the consolidation area that we have been stuck in for about 2 months now, and as a result we feel that the market will ultimately breakout to the upside but we have to wait and see whether or not we get the actual move. We have no interest in shorting this market, we believe the 0.85 level will be the “floor.”

GBP/USD forecast for the week of May 5, 2014, Technical Analysis

The GBP/USD pair initially fell during the week, but turned back around to form a positive candle. We have broken out and up to the 1.65 level, but that area offered enough resistance to push the market back down. With that, we feel that the market will eventually go to the 1.70 handle, an area that should be significant resistance. Going forward, we do think that the market will break above there, and we believe that the 1.65 level is the “floor” in this market. We are “buy only.”