Forex Investment and Currency Trading

• S&P 500: Trades at levels not seen since 1997 and posts a poor weekly and monthly close below the 2002 low. Further losses are likely
• Dow Transorpts: Posted a monthly close below trend support and the 200 month moving average for the first time in over 3 decades. This is a major bearish development suggesting significant losses ahead
• Dow Industrials: Weak close posted on Friday. Now expect a test of the support level at 6,356. The Dow Transports and Industrials are making new lows for the downtrend confirming that the overall trend is stocks is indeed down.
• Dow / Crude: Significant weakness seen here against the Dow and the 200 dma and trend support should be tested. That is 12 below current levels. Stocks are likely to further under perform.
• FTSE 100: Trending lower.

S&P 500 Index

S&P 500: This is very weak looking chart with the monthly close below the 2002 low which was at 768. While over the long term the double top pattern would target sub 400, the weeks ahead are likely to see the index test support levels at 681 the high from May 1996. Beyond that, support comes in at 605, the low from July 1996.

Dow Jones Transports

The chart above goes back to the early 1920’s. The 200 month moving average has been breached on a monthly close basis for the first time in 33 years (the last time was in 1976). Overall this is very bearish and gives a leading indication of where the Dow Industrials are going (according to Dow Theory). The next major support on the Dow Transportation index is at 1,918, approximately 23% below the current level.

Dow Transports and Dow Industrials

Both markets have closed below support levels and are making new lows for the downtrend. This confirms that the overall trend is down and further losses are likely

Dow Jones Industrials

Dow Industrials: Closed the week and month below the 2002 low which was at 7,197. The next stop is likely to be 6,356 with interim support at 6,973.

FTSE 100

FTSE 100: The November low at 4,260 is under threat and a breach of that level would suggest a test of 3,609 in the ST. Beyond that, a test of the 2003 low at 3,277 is expected over a period of weeks.

Dow ./ Crude

Dow / Crude: Appears to be a significant breach lower with crude outperforming. The trend support and the 200 dma converge at 136 which is the target. A breach of that would be significantly bearish.