Italy and Greece Pass the Baton

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By Adam Hewison

Italy and Greece pass the baton to the technocrats, but does it really matter at this point?

As we start this trading week, we’ve seen a change in the governments of both Greece and Italy, as the rule of the technocrats is now upon us. They can make the hard decisions that politicians can’t seem to, but it is a bitter pill for the citizens of those countries to swallow. The bigger problem, and one that is complex and not easy to solve, will be social unrest.

No matter how things are sliced and diced in Europe, there is still a mega amount of money owed to banks that needs to be reconciled. The way the markets are opening today, it would appear as though no one is easy with the current changes. It may just be a case of “buy the rumor and sell the news.”

I believe this is going to be a very interesting trading week, one that will decide the trend for the balance of the year. Our longer-term Trade Triangles remain negative on the equity markets. Only time will tell whether that proves to be the position to be in.

Now, let’s go to the charts and the video and see how we can create and maintain your wealth in 2011.

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S&P 500 INDEX
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OUR VIEW: Line in the sand $1220
Combined Strength of Trend Score = -55

No change in our comments from Friday. The lines are now clearly drawn in the sand for both the upside and the downside for this index. We believe that the $1220 level holds the key on the downside and the $1295 to $1300 levels are key barriers to this market moving higher. With a Chart Analysis Score of -55, we continue to be stuck in a trading range. Intermediate traders should be on the sidelines waiting for a new Trade Triangle short signal. Long-term traders should either be in cash or continue to hold short positions in this index.

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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
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Suggested S&P 500 Trading Instruments:
Non Leveraged ETF’s: (Long SPY) (Short SH)
2 x Leveraged ETF’s: (Long SSO)(Short SDS)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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SILVER (SPOT)
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OUR VIEW: Trading Range
Combined Strength of Trend Score = -55

The spot silver market continues to be trapped in limbo and seems unable to move either higher or lower. That is reflected in the current market action, which is about unchanged for the week. This market remains in a broad trading range bound by $33.50 an ounce on the downside, and $35.50 an ounce on the upside. With our Chart Analysis Score reading -55, we seen no clear-cut trend at the moment for this metal. Generally speaking, the major trend for silver continues to be negative based on our monthly Trade Triangle and the intermediate Trade Triangle remains in conflict. Long-term traders should continue to hold short positions in silver with appropriate stops.

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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trend = Positive
Daily Trade Triangles for Short-Term Trends = Negative
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Suggested SILVER Trading Instruments:
Non Leveraged ETF’s: (Long SLV) (Short the ETF SLV)
Leveraged ETF’s: (Long AGQ) (Short ZSL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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GOLD (SPOT)
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OUR VIEW: Resistance at $1,800
Combined Strength of Trend Score = +75

For the moment, the $1800 level is proving to be a formidable resistance area for spot gold. Our Chart Analysis Score remains intact, with a +75 reading indicating that this market is in strong hands. Gold indicates to us to be concerned about what is happening in Europe and the financial markets. Long-term and intermediate term trends remain positive for this precious metal. Intermediate and long-term traders should maintain long positions with the appropriate money management stops in place.

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Monthly trade triangles for Long-term trends = Positive
weekly trade triangles for intermediate term trends = Positive
daily trade triangles for short-term trends = Negative
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Suggested GOLD Trading Instruments:
Non Leveraged ETF’s: (Long GLD) (Short the ETF GLD)
Leveraged ETF’s:(Long UGL) (Short GLL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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COPPER (DECEMBER)
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OUR VIEW: Resistance at $3.60
Combined Strength of Trend Score = -75

Only our weekly Trade Triangle remains positive and we expect that indicator will turn negative again. Copper generally reflects economic conditions, and as such is influenced by equity prices. With a Chart Analysis Score of -75, this metal is in a trading range. Generally speaking, the major trend for this metal continues to be negative, while the intermediate trend is in conflict. Long-term traders should continue to hold short positions in copper with appropriate stops.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
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Suggested Copper Trading Instruments:
Non Leveraged ETF’s: (Long JJC)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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CRUDE OIL (DECEMBER)
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OUR VIEW: Resistance a $100 a barrel
Combined Strength of Trend Score = +60

The $100 level is an enormous psychological area for this market and we suspect that we will see profit-taking and some professional selling in at those levels. With a Chart Analysis Score of +60, this market remains in a broad trading range. The $100 level represents a 61.8% retracement of the entire down move starting from the highs seen earlier this year in April. Intermediate term traders should be on the sidelines. Long-term traders should continue to be short the crude oil market.

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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
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Suggested Trading Instruments:
Non Leveraged ETF’s: (Long USO) (Short the ETF USO)
Leveraged ETF’s: (Long UCO) (Short DTO)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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DOLLAR INDEX
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OUR VIEW: Near-term resistance at $78.50
Combined Strength of Trend Score = +100

With a +100 Chart Analysis Score, the dollar index is in a strong upward trend. We believe the $76.5 level will act as good support for this index. We are looking for a test of the $79.50 – $80.00 levels. Our longer-term monthly Trade Triangle remains in a positive mode and our intermediate term weekly Trade Triangle turned positive last week. Long-Term and intermediate term traders should maintain long positions with the appropriate stops in place.

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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
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Suggested DOLLAR INDEX Trading Instruments:
Non Leveraged ETF’s: (Long UUP) (Short UDN)
Leveraged ETF’s: (Long) (Short)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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REUTERS/JEFFERIES CRB COMMODITY INDEX
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OUR VIEW: Trading Range
Combined Strength of Trend Score = -55

Today this index moved below our PSAR indicator and doing so signals further weakness for this market. Like many of the other markets we are tracking right now the CRB index is in a trading range with a Chart Analysis Score of -55. Resistance is evident at the $325 level and support comes in around the $315 area. Look for these levels to contain the market for the balance of the week. Our longer-term Trade Triangle remains negative for this index. Intermediate term traders should be on the sidelines. Long-Term traders should maintain short positions with the appropriate money management stops in place.

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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
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Suggested REUTERS/JEFFERIES CRB COMMODITY INDEX Trading Instruments:
Non Leveraged ETF’s: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETF’s: (Long) (Short CMD)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.

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HOW TO USE THE MARKETCLUB SCORING SYSTEM:
Chart Analysis Score: 50 – 65 Trading Range
Chart Analysis Score: 70 – 80 Emerging Trend
Chart Analysis Score: 85 – 100 Strong Trend

[Ed. Note: Adam Hewison is the president, chief executive officer, and a founder of INO.com, Inc. He is also the author of two highly-acclaimed guides to the forex markets: International Monetary Report and Right on the Money, the Definitive Guide to Forecasting Foreign Exchange Rates. Sign up for his FREE email Trading Course by clicking here now.]

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