MSCI WORLD STOCK INDEX – Prices have taken out resistance at $1111.53, the 50% Fibonacci retracement of the 8/5-8/25 downswing (now acting as near-term support), with the bulls now poised to test the 61.8% fib at $1122.74. A break above this boundary exposes the 76.4% level at $1136.60.
US DOLLAR INDEX – Unchanged from yesterday: “Prices continue to consolidate between the 38.2% and 23.6% Fibonacci retracements of the 6/7-8/6 downswing, at 83.37 and 82.12 respectively. A break below near-term support clears the way for a return to the 80.00 figure while an advance past immediate resistance exposes the 50% fib at 84.39.”
Longer term, Dollar positioning hints a majorHead and Shoulders bottom has been taking shape since mid-2004, pointing to a structural advance over the coming years that would amount to parity on the greenback’s exchange rate with the Euro.
CRUDE OIL –Prices remain wedged between support-turned-resistance at the bottom of a rising channel set from late May (now at $76.34) and a horizontal barrier at $71.09. A move above immediate resistance exposes the $80.00 figure while a break lower clears the way for a test of the previous bottom at $68.01.
GOLD – Positioning continues to point to an advance toward the record high at $1265.30 after the bulls took out resistance at the $1243.27 level. This juncture is now acting as support and is reinforced by the bottom of a rising channel that has confined prices since late July. Alternatively, a reversal lower that sees prices slip back below $1243.27 will target initial support at $1215.47.
Longer term, gold positioning reveals bearish cues with clear negative RSI divergence hinting that a major top may be taking shape. Confirmation of a downward reversal in line with our fundamental outlook requires a weekly close below a rising trend line set from the swing bottom in late 2008, now at $1198.36.
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