Here is a decent selection of charts to peruse for the start the week...

Might be bumpy - VHF

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The S&P 500 Index surprisingly added 20.95 points (2.28%) last week. On the surface, several key technical indicators turned positive. Intermediate trend changed from down to up when the Index broke above resistance levels at 930.17 and 943.85. The Index also broke above its 200 day moving average. However, gains were suspicious at best. All the gains occurred last Monday. Following the breakouts, follow through was notably lacking. Volume continues to trend lower. New support is at 878.94. MACD and RSI peaked four weeks ago. Stochastics are short term overbought.

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The Dow Jones Industrial Average rose a surprising 262.80 points (3.09%) last week. Intermediate trend changed from down to up when the Average broke above resistance at 8,591.93. It also moved above its 200 day moving average. Support is indicated at 8,230.17. Significance of the breakouts is suspicious. Follow through after the breakout on Monday was anemic at best. Breakouts occurred on declining volume. MACD and RSI peaked at overbought levels four weeks ago. Stochastics are short term overbought. Strength relative to the S&P 500 Index remains negative.

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The big story last week was fluctuations in the U.S. Dollar. The Dollar continued to weaken on Monday, but recorded a “snap back” recovery thereafter. It closed up 1.39 for the week. Intermediate trend remains down. MACD recorded a buy signal on Friday. RSI has recovered from below the 30% level, another short term momentum buy signal. Stochastics also are recovering from a short term oversold level. A short term recovery to the breakdown level at 82.63 within an intermediate downtrend is possible. Currency markets were relieved that the Chinese did not officially act negatively to proposals made by Treasury Secretary Tim Geithner last week.

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The Canadian Dollar found resistance near the bottom of a previous resistance level. It dropped 2.35 cents U.S. last week. Short term momentum indicators are overbought and have rolled over. Intermediate trend remains up. Its 50 day moving average moved above its 200 day moving average. Downside risk is to the breakout level at 85.02.

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The CRB Index reacted to fluctuations in the U.S. Dollar. It strengthened early last week with weakness in the U.S. Dollar and weakened thereafter. The Index gained 4.87 last week and moved above its 200 day moving average.

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Gold quickly responded to strength in the U.S. Dollar. It lost $24.60 U.S. per ounce last week. Resistance at $1,007.70 U.S. per ounce proved to be formidable. Short term momentum indicators rolled over from overbought levels (e.g. RSI moving below the 70% level reached in the previous week).

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Gold and gold equities are unlikely to enter their next period of seasonal strength until gold in Canadian Dollars, Euros and British Pounds move above their recent trading range. Gold in Canadian Dollars looks very different than gold in U.S. Dollars. Trading range during the past nine weeks has been between $1,038.00 and 1,111.00 Cdn. per ounce.

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Silver slipped $0.46 U.S. per ounce last week. It moved lower after moving into a zone of resistance starting at $16.06 U.S. per ounce.

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After hitting a high on Monday, HUI promptly lost 9.0%. Short term momentum indicators have rolled over. A MACD sell signal was recorded on Friday.

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U.S. Treasury bond yields spiked 0.12% on Friday. The yield on 10 year Treasuries jumped 0.37% last week and is rapidly approaching resistance at 4.08%. Yields are responding to the realization that the U.S. government is planning to roll over or raise additional funds this week valued at $127 billion. Included are a new $19 billion 10 year issue and a new $11 billion 30 year issue. The Treasury Department needs to borrow or print $1.8 billion in 2009 to cover its 2009 budget deficit and will need to finance an equally sized deficit in 2010.

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The S&P Financial Service Index remains locked in a tight five week trading range between 151.61 and 175.87. Short term momentum indicators are trending lower from an overbought level. Favourable seasonal influences were over at the end of May.