This weeks technical survey of the futures and FOREX markets suggest that this may very well be a critical week. Market indexes like the DOW, S&P and Nasdaq had a strong finish last week and were clearly in a bullish stance. However it is important to point out that, with the exception of the Nasdaq, the futures closed out last week with LOWER pivots than the previous week. Likewise the YEN has a very strong week posting a higher weekly pivot and close and remains very bullish. While most other currencies spent the week recovering from the initial slide on Sunday evening (April 19) and Monday, they too closed with LOWER weekly pivots last week.
As an analyst I study the interconnectedness of the financial, currency and commodity markets and from my view point the relationship between the currency markets and the market indexes suggest a potential significant correction is possible. Unless the we can set new index highs early in the coming week I expect to see heavy selling in both currencies and index futures. The Yen and the Swiss Franc remain poised to continue a bullish run along with the US Dollar. The other story in all this is Gold and while in the short term I have been and remain cautiously bullish, we need to see a close above 930 for a continued move higher. In the event markets sell off this week, then look for gold to move higher. If the rally in Index Futures continues and new highs are set early in the week then look for heavy gold selling and much higher numbers on the DOW, S&P and Nasdaq. As usual I will let the charts tell me where the market is going but this week could be very significant one way or the other.
Michael Hayes, CTGFutures Senior Market Analyst
