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This will be a short report as I am working on
Newsletter. Was today (January 3, 2007) interesting or what? The real kicker
was the stock market as some one rushed into to save it at the last minute
when all that "good news" didn't take. Let's take a look:
US$ - The dollar had a good really good day
today. The March 07 dollar rallied .71 to end today's session at 83.68. The
close still leaves us below good Fibonacci resistance at 83.75 although
we did trade as high as 83.80. We managed to close back below good support at
83.12 yesterday before today's rally. Additional support is now
at 83.64, 83.49, and 83.12. We have resistance at 84.34
and 84.91. Finally, there is a trend line at 83.75 which will be hard to
surpass. I want to take a look at the daily chart of the dollar:
You can see how the 84.00 area has been a tough area
to work through. Right now we are trading in a range from 83.00 to 84.00
until the next move. This appears to be distribution to me. The above chart
is quite bearish with a series of lower highs and lower lows. I believe the dollar
will hold 84.34 and we'll turn down. I am short the dollar and will stay
that way.
CHF - The Franc took a real beating today. The
March CHF fell .0082 to end the session all the way back down at .8214. Fibonacci
resistance is at .8220, .8238, .8245, and .8282. Today we
closed marginally below the key Fibonacci support at .8220. The
real challenge will be to see if the Franc can test critical support at .8156.
There is also a trend line at .8210 that will offer good support. I believe
the Franc is going higher over the medium term. I am long the Swiss Franc
and will stay that way.
BONDS - The bonds had a few buyers today as the
good news implied lower rates but it wasn't a convincing performance. Maybe
the Fed comments dampened their spirits. The March Bond rallied .07 to end
the session at 111.30 but off the intraday high of 112.09. Support is at
111.28, 111.22, and 111.18 and the latter is very significant. We
also have a trend line at 112.07 which will be significant. Resistance is at
112.01, 112.17, and 112.31. The bonds are now twenty days off
of their highs and that is more than a counter trend move. Take a look at the daily chart:
We're now three days off the bottom so any reaction
should end tomorrow. I believe the lower high I was looking for is in and we
are headed lower and that means higher interest rates are in our future. I
am short the bonds and I will stay short unless I see a close above 114.12.
DJIA - It has been a very interesting day in the
Dow. The Dow opened up with a big rally, trading as high as 12,652, and then
fell all the way down to 12,470. The March DJIA ended the day down 9 points
to close out the day at 12,530. The intraday high was 12,652 and is a new
all-time high. We'll find support at 12,511, 12,488, and 12,451
while resistance is at 12,842. The Transports had an up day as
they rallied 90.46 points to close at 4,650.66. Take a look at the daily
chart for the Transports:
Another head-and-shoulders formation with another
unconfirmed top. We were below the 200-dma and now it looks like we're going back
up to test the 50-dma. The S & P tested the 1426.00 level again and
failed as it closed down 1.67 at 1416.63. Only the Consumer Index managed to
move up today. What can I tell you? The warning signs are everywhere for
anyone with eyes to see. I am short the Dow until further notice.
CRB - The CRB took a dreadful beating today. The
January CRB declined 9.75 to close at 387.75 and marginally above very good
support at 386.16. There is resistance at 389.50, 392.25, and 395.09 while
support is at 386.16 and then 383.95. I expected the 395.00
area to hold and it didn't. Finally, there is a trend line at 387.70 and I am
interested to see if it will hold. If not, we'll probably test the 200-dma at
381.85. Eventually, I expect a run up to new highs well beyond 418.00. I
am long the CRB and will stay that way.
GOLD - It was a strange day in the gold pits. The
Feb. Gold closed down 8.2 to end the session at 629.8 and well off the 647.3
intraday high. There is support at 629.7, 624.9, and 622.1 while resistance
is at 630.2, 631.9, and 633.6. So far our first correction measured 6.25%.
Take a look at the daily chart for gold:
As you can see, gold has come back down to test the
50-wma at 627.65. I've told you for weeks that the four important numbers are
610.3, 637.9, 665.8, and 696.4 and we tested 637.9 and fell back down below
it again. I think the recent 615.0 low would hold but I want to see how
tomorrow shapes up. No damage has been done to gold here. I am long
gold and will stay that way.
SILVER - Silver took a bigger beating than gold
today. The March Silver finished the day down 26.5 to go out at 1267.0 and
still well above good support at 1255.5. We'll find support at 1255.5
and 1212.6 while resistance is at 1280.5, 1298.6, and 1315.0. This was
just another day in the life of silver. Corrections will be volatile and it
will only get worse as we head higher. Investors must proceed with
intelligence and care. I am long silver and will stay that way.
GOLD STOCKS - The HUI took
a big hit today as investors bailed. The HUI closed down 13.78 to end the
session at 324.46. We have very good support at 320.69. There
is resistance at 336.11 and 348.54. We came to rest today below the 50-wma at
327.42 -- and I will be interested to see if we move back above it tomorrow. I
will continue to sit tight. I am long AEM, BVN, CDE, GG, GSC, NEM, RGLD, and
SLW. I am long the gold stocks.
Enrico Orlandini
Dow Theory Analysis
Ignacio Merino 636, Santa Cruz,
Miaflores,
Peru
Phone: 001-51-56-973-5599 - Fax
: 001-51-19-280-8796
Email: ebo@dowtheoryanalysis.com
Website: www.dowtheoryanalysis.com
For those of you interested in receiving
information on the Funds we manage, please feel free to e-mail us at ebo@dowtheoryanalysis.com and we will respond as soon as possible.
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