U$D Index, Major Bottom Getting Close (Not Quite There)....

The long held, longer term bearish view in the $ index remains in place. But risk is rising rapidly for at least 3-4 months of correcting higher and minimum 5-6 point bounce (and potentially much more), as the market is within the final downleg in the whole fall from the March high (wave V). Note too that the market appears to be forming a falling wedge/bottoming pattern over the last few months, seasonal charts bottom around the mid Oct the timeframe (see 3rd chart below), and time cycles for a number of other financial markets also reverse around that time. This in turn adds weight to the view that a potentially major bottoming is getting close (but not quite there, see “ideal” scenario in red on weekly chart below). Switched the longer term bias to the bearish side on the March “false break” above the Nov high at 88.45, but will be watching for better signs/higher confidence of this longer term bottom (especially as mid Oct approaches) to switch out.

Nearer term in the Sept 23rd email, warned that risk was rising rapidly for a 125-150 tick bounce as the apex of the Aug triangle occurred near that day (often coincides with temp market reversals, see daily chart/2nd chart below) and the market was near term oversold. Took profits on the Aug 7th short at 78.30 there (then at 76.15 for a 215 tick profit). The market has indeed bounced from that day, and on Tuesday reaching the resell target area at 77.30 (145 tick bounce from the low). For now, would use a close above the bearish trendline from July as a sign to stop (currently at 78.00/10), as there is some risk for more topping nearby, but will want to trail stops lower with the market (getting especially aggressive on break below the 75.85 low as further downside may be limited and part of a longer term bottoming). Note that even a break above the bearish trendline from July would not necessarily abort the bigger picture view of another few weeks of wide ranging/bottoming, so would not immediately look to reverse to the long side on such a break above. Nearby support below 75.85 is seen at 76.40/50.

Seasonal chart courtesy of Moore Research, Inc.

David Solin
Foreign Exchange Analytics

FuturesPulse Market Recap

***BOND MARKET RECAP - 10/1/2009
December Bonds finished up 1-090 at 122-210, 0-120 off the high and 1-070 up from the low.

December 10 Yr Treasury Notes closed up 0-300 at 119-085. This was 0-290 up from the low and 0-050 off the high.

Technical Outlook
BONDS (DEC) 10/02/2009: Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside target is at 124-090. The 9-day RSI over 70 indicates the market is approaching overbought levels. The next area of resistance is around 123-210 and 124-090, while 1st support hits today at 121-250 and below there at 120-160.

10 YR TREASURY NOTES (DEC) 10/02/2009: Momentum studies are trending higher but have entered overbought levels. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market's close above the 2nd swing resistance number is a bullish indication. The near-term upside target is at 120-085. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 119-290 and 120-085, while 1st support hits today at 118-230 and below there at 117-280.

**********************************************************************

***STOCK INDICES RECAP - 10/1/2009
December S&P closed down 25.5 at 1027.4. This was 2.9 up from the low and 21.3 off the high. December S&P E-Mini finished down 25.5 at 1027.5, 28.5 off the high and 3 up from the low.

December Dow finished down 183 at 9470, 160 off the high and 28 up from the low.

Technical Outlook
S&P 500 (DEC) 10/02/2009: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. The close below the 2nd swing support number puts the market on the defensive. The next downside target is 1002.55. The next area of resistance is around 1043.00 and 1064.95, while 1st support hits today at 1011.80 and below there at 1002.55.

S&P E-MINI (DEC) 10/02/2009: Momentum studies trending lower at mid-range could
accelerate a price break if support levels are broken. The close below the 18-day moving average is an indication the intermediate-term trend has turned down. There could be some early pressure today given the market's negative setup with the close below the 2nd swing support. The next downside target is 1002.38. The next area of resistance is around 1043.25 and 1065.37, while 1st support hits today at 1011.75 and below there at 1002.38.

NASDAQ (DEC) 10/02/2009: Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is 1620.25. The next area of resistance is around 1701.50 and 1744.25, while 1st support hits today at 1639.50 and below there at 1620.25.

DOW (DEC) 10/02/2009: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 9554. The next area of resistance is around 9672 and 9717, while 1st support hits today at 9590 and below there at 9554.


**********************************************************************

***CURRENCY MARKET RECAP - 10/1/2009
December US Dollar closed up 0.52 at 77.380. This was 0.580 up from the low and 0.115 off the high.

December Euro closed down 1.02 at 145.43. This was 0.28 up from the low and 1.24 off the high.

December Japanese Yen finished down 0.09 at 111.53, 0.36 off the high and 0.58 up from the low.

December Swiss finished down 0.47 at 96.13, 0.65 off the high and 0.42 up from the low.

December Canadian Dollar finished down 1.29 at 92.35, 1.36 off the high and 0.16 up from the low.

December British Pound closed down 0.54 at 159.48. This was 0.28 up from the low and 0.76 off the high.

Technical Outlook
JAPANESE YEN (DEC) 10/02/2009: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. A positive signal for trend short-term was given on a close over the 9-bar moving average. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside objective is 110.53. The next area of resistance is around 111.99 and 112.41, while 1st support hits today at 111.05 and below there at 110.53.

EURO (DEC) 10/02/2009: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The close below the 1st swing support could weigh on the market. The next downside objective is now at 144.12. The next area of resistance is around 146.12 and 147.15, while 1st support hits today at 144.60 and below there at 144.12.


**********************************************************************

***PRECIOUS METALS RECAP - 10/1/2009
December Gold closed down 8.6 at 1000.7. This was 1.9 up from the low and 8.1 off the high.

December Silver finished down 0.218 at 16.44, 0.305 off the high and 0.035 up from the low.

Technical Outlook
COMEX SILVER (DEC) 10/02/2009: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The daily closing price reversal down is a negative indicator for prices. The market setup is somewhat negative with the close under the 1st swing support. The next downside target is now at 1602.4. The next area of resistance is around 1659.7 and 1691.3, while 1st support hits today at 1615.3 and below there at
1602.4.

COMEX GOLD (DEC) 10/02/2009: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The close under the 18-day moving average indicates the intermediate-term trend could be turning down. The market could take on a defensive posture with the daily closing price reversal down. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is now at 989.9. The next area of resistance is around 1006.0 and 1014.8, while 1st support hits today at 993.6 and below there at 989.9.


**********************************************************************

***ENERGY MARKET RECAP - 10/1/2009
November Crude Oil closed down 0.27 at 70.34. This was 1.21 up from the low and 1.05 off the high.

November Heating Oil closed down 1.50 at 181.74. This was 2.36 up from the low and 3.22 off the high.

November RBOB Gasoline finished down 0.06 at 175.10, 3.14 off the high and 2.60 up from the low.

November Natural Gas finished down 0.37 at 4.47, 0.35 off the high and 0.04 up from the low.



Technical Outlook
CRUDE OIL (NOV) 10/02/2009: The market back below the 60-day moving average suggests the longer-term trend could be turning down. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The close above the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal down puts the market on the defensive. The close over the pivot swing is a somewhat positive setup. The next upside target is 72.56. The next area of resistance is around 71.48 and 72.56, while 1st support hits today at 69.22 and below there at 68.05.

RBOB GAS (NOV) 10/02/2009: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close over the pivot swing is a somewhat positive setup. The next upside objective is 180.97. The next area of resistance is round 177.97 and 180.97, while 1st support hits today at 172.23 and below there at 169.50.

HEATING OIL (NOV) 10/02/2009: Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The close above the 9-day moving average is a positive short-term indicator for trend. The market could take on a defensive posture with the daily closing price reversal down. The close over the pivot swing is a somewhat positive setup. The near-term upside objective is at 187.53. The next area of resistance is around 184.53 and 187.53, while 1st support hits today at 178.95 and below there at 176.38.