27 Nov: Forecast: Stocks/ Commodities.

Trying to pick the top in US stocks is a fruitless exercise and until we see some confirmation of a reversal I prefer not to be involved at these lofty levels.  At this stage there is little sign of a significant turnaround to the longer term uptrend despite the toppish look of the indicators so I am staying out.

The 4 hour indicators are now pretty neutral and minor resistance at Friday’s high of 6006 may cap it today although a break of this could allow the chance of a squeeze up to the recent highs of 6025 and 6046, which would see decent sellers.

The dailies are pointing increasingly lower though, and I suspect that in the next few days we could see a return to Friday’s low of 5960. Below 5950 would then see the chance of a move back to the 5927, 16 Nov low. Below that would extend to 5900 and on to 5880, albeit not today.

In the longer term, the weeklies still point higher and If we do carry on above the recent  6025 and 6046 highs, there seems to be little to stop the SPI reaching 6102, which would close a major chart gap from Dec 2007

If we see the dollar regain its recent losses and risk sentiment improves over the coming week, we could then see a move out of risk assets and a return to 1275, where strong support lies but below which would open up the chance of a move to 1260 and then to 1250, where the rising trend support will provide decent support.

The dailies are still rather neutral too, so I would not be getting too excited here given the confluence of the major moving averages at current levels which may act as a medium term magnate, but further gains, above 17.15/20, could then see a run towards 17.45 and even to 17.75.

On the downside, support will be seen at 16.90/85 and then at 16.75 below which would return to 16.60 but right now this seems unlikely.

With the momentum indicators generally looking positive we could see further gains in the days ahead although the shorter term charts do hint at some bearish divergence so we may see better levels to buy into.

If so, on the downside, support will be seen at around 58.00/30 and then again at 57.75 and at 57.00 and looking for somewhere in there to buy it seems to be the plan.

A sustained break of the strong resistance seen at the 200 WMA could see a quick run to 60.00 and higher, with little to stop it heading to 61.80/62.50. Beyond there, there is nothing to stop it heading to 66.00 and I am beginning to think we are on our way to 75.00! Wait for the OPEC Meeting to find out!

Buy WTI @ 58.50. SL @ 57.50, TP @ 61.00