A quick review as we start a new week...

Regards - VHF

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Several strange and unexpected events happened last week:

• Gold and silver prices fell despite significant weakness in the U.S. Dollar.
• Broadly based North American equity indices moved slightly higher by the end of the week despite overbought momentum indicators that started to move lower early last week.
• North American equity markets moved higher despite weakness in Far East markets.
• European equity markets moved higher despite credit downgrades/negative guidance on selected European sovereign debt.
• North American equity markets moved higher late last week despite economic reports suggesting less confidence in the U.S. recovery.
• Despite blow out fourth quarter reports released by Alcoa, Intel and JP Morgan accompanied by positive first quarter guidance, all initially moved higher, but quickly came under pressure within 24 hours of their announcement.

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Gold slipped $9.20 per ounce (0.67%) last week despite weakness in the U.S. Dollar Index. Support is indicated at $1,330.00 and $1,315.50. Short term momentum indicators are oversold, but have yet to show signs of bottoming.

The Philadelphia Gold Index fell another 5.58 points (2.64%) last week and is currently testing support at 204.60. Short term momentum indicators are oversold, but have yet to show signs of bottoming. Strength relative to gold has turned negative.

Silver slipped $0.34 (1.20%) last week. It is testing support at $27.97. Short term momentum indicators are trending down and have yet to show signs of bottoming. Strength relative to gold has been positive, but is showing early signs of change.

Platinum added $80.00 (4.63%) last week. It broke resistance at $1,806.00 to reach a 2.5 year high. Strength relative to gold remains positive. Short term momentum indicators are overbought, but have yet to show signs of peaking.

Palladium added $47.55 (6.22%) last week to reach a 2.5 year high. Strength relative to gold remains positive. Momentum indicators are overbought.

Copper added 12.95 cents per lb. last week. Resistance appears to be forming at $4.498 per lb. Short term momentum indicators are mixed.

The CRB Index added 9.12 points (2.82%) last week partially in response to weakness in the U.S. Dollar Index. Short term momentum indicators currently are overbought.

Gasoline gained another $0.09 (3.73%) last week to reach a 2.5 year high. Short term momentum indicators are overbought, but have yet to show signs of peaking.

Crude Oil added $3.71 per barrel (4.20%) last week. Short term momentum indicators were recovering and remain overbought. Crude oil bounced from near its 50 day moving average.

Natural gas added $0.07 (1.58%) last week. Short term momentum indicators remain overbought.

The U.S. Dollar Index fell 1.98 last week. Intermediate trend remains down. The Dollar is testing the bottom of an eight week trading range between 78.78 and 81.44. Short term momentum indicators are trending down.

Conversely, the Euro gained 4.63 last week. It recovered to the top of an eight week trading range between 128.91 and 134.72. Short term momentum indicators are trending higher.

The Canadian Dollar added 0.23 last week. Short term momentum indicators are overbought, but have yet to show signs of peaking.

The S&P 500 Index added 21.74 points (1.71%) last week. Intermediate trend remains up. The Index remains well above its 50 and 200 day moving averages. Stochastics remain overbought (above 80%) and RSI remains overbought (over 70%). MACD also is overbought, shows negative divergence relative to the Index and close to recording a negative cross over. Downside risk during an intermediate correction is to its 50 day moving average currently at 1,233.71.

The Dow Jones Industrial Average added 112.62 points (0.96%) last week. Intermediate trend remains up. The Average trades well above its 50 and 200 day moving averages. Strength relative to the S&P 500 Index remains negative. Stochastics, RSI and MACD remain overbought. They briefly fell below critical technical levels last Wednesday, but quickly recovered above those levels on Thursday and Friday. The Average is vulnerable to a short term correction. Downside risk during a short term correction is to its 50 day moving average currently at 11,418.25.

The TSX Composite Index added 191.76 points (1.44%) last week. Intermediate trend remains up. The Index may be forming resistance at 13,530.35. The Index remains above its 50 and 200 day moving averages. Short term momentum indicators began trending lower from an overbought level two weeks ago. Last week they returned to overbought levels. Strength relative to the S&P 500 Index remains negative.

The yield on 10 year Treasuries was virtually unchanged last week. It remains in a tight six week trading range between 3.249% and 3.556%. Momentum indicators are mixed.

Conversely, long term Treasury ETF prices were virtually unchanged last week (down $0.52). They also remain in a six week trading range between $90.16 and $94.70.

The Baltic Dry Index fell anther 80 points (5.27%) last week. Intermediate downtrend remains intact. Not a good sign for international trade!

The VIX Index slipped 1.68% last week and tested long term support at 15.23%.