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Business
MARKET RADAR: Rise Expected for Stocks, Oil and Gold
Tuesday, April 19, 2011
By Bill Sarubbi
Tokyo- (PanOrient News) Stocks are likely to run higher. First, as pointed out in past reports, serious market tops are typically preceded by weakness in breadth and in new highs-new lows. None are present at this time. Looking at the graphs of the Dow Industrials, Transports, and the Utilities, the recent correction appears to be a normal one in an ongoing uptrend. The utilities have exceeded their April high; the industrials and the transports will likely follow. The 10-day moving average breadth lines for both the NASDAQ and the NYSE have become oversold and are turning up at a higher level than the last low. The investor survey poll from AAII shows that sentiment is at the long-term average. Thus, there is not too much optimism. This climate is supportive of higher prices.
The Chinese, Thai and Korean markets will likely be leaders in 2011. The Shanghai index has formed a very long base since its 2007 high. There are momentum buy signals and the next target is the old 3388 high. On a monthly basis, the Thai Set has broken out of a major formation on a monthly basis that project 1300-1400 as a price target. The Korean market is one of the few stock markets that has already exceeded its 2007 high. The KOSPI is likely to move higher.
OIL
The oil uptrend continues. There are a series of higher lows in momentum in the daily graph. The monthly graph shows that the next stopping point or barrier is the 78% retracement level at $122.
GOLD
The gold cycle has been flat to down since November. During this period, gold has risen about $50 over 4 or 5 months. The fact that the price did not fall while the cycle was down is bullish. It turned up on April 12th. It is curious to note that the cycle bottomed in the same week that the US budget was approved. This tells us that there are no real cuts and that the Fed will have to continue to issue excessive credit. Gold has accelerated since the 12th. The first objective is $1550 and the second is $1680. This level will likely be reached by early June.
Bill Sarubbi, a strategist and portfolio manager currently operates his own business from Europe. He spends most of his time in Vienna, London, Tokyo, and Abu Dhabi.
PanOrient News
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