Sometimes it is worthwhile to read analysts expectations outside of North America for additional perspective. Colin Twiggs is one of Australia's trading elite and here is his latest take...

By Colin Twiggs
September 20, 4:30 a.m. ET (6:30 p.m. AET)

The press is full of headlines about stocks soaring and massive rallies. I cannot imagine too many fund managers rushing out to buy stocks in the middle of a market cave-in. That is how you lose your job. The current rally is not driven by new investors rushing in to snap up bargains. The SEC and UK financial regulators have both banned short selling of financial shares, forcing shorts to cover their open positions — causing a huge upward spike in financial stocks like Morgan Stanley [MS] and Goldman Sachs [GS].

We are undergoing another bear market rally. I often equate these to a drowning man's relief at finding a life-raft — before the realization dawns on him that he is still lost in the middle of the Pacific ocean without food or water.

Spot gold climbed sharply during the week as investors fled to the safety of precious metals and treasurys. We can expect sweeping measures from authorities in an attempt to restore stability to financial markets. If successful, the latest gold rally is likely to be short-lived. Breakout above $850 is a large correction which some analysts believe signal the start of a new up-trend. Reversal below $820 per ounce, however, would warn of another test of primary support at $735; while recovery above $900 would confirm the new up-trend.

The Dow is headed for a test of resistance at 11800. Strong volume earlier in the week indicates buying support, but Friday's volume spike is due to triple-witching hour: the closing of index options and futures contracts. The rally is not likely to break through resistance — and we can expect another test of 11000.

Do not forget that Kraft Foods will replace American International Group with effect from Monday, providing an artificial boost to the index.

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A good example of the short squeeze forced yesterday by the SEC can be seen in Chart 1 below of Zion Bank. In the first 10 minutes of trading yesterday, the share price went from $45 to $130 then back to $50. Hardly is such a move based on fundamentals.

Chart 2 further below shows the relative nature of gold's move last week. Of course, some follow through will be needed next week for trend confirmation.

Regards - VHF

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Chart 1: Zion Bancorp

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Chart 2: Fund Weekly Movement