Moving Averages Flirting with Key Levels
Source: Safe Haven, Prieur du Plessis††(11/24/10)
"Most major indices are within striking distance of their 50-day MA."
David Fuller (Fullermoney) provides the following perspective: "Technical evidence of this corrective phase can now be seen in the combinations of recently failed upside breaks, downward dynamics, breaks of rising lows within the prior short-term uptrends and the ranging loss of upside momentum. It would be prudent to expect this process to continue for a while longer in what is at least a partial mean reversion towards the rising 200-day moving averages."
The table below shows moving averages for the other major asset classesócommodities, gold, currencies and government bonds. Interestingly, the Reuters/Jeffries CRB Index is still marginally above its 50 dma, whereas WTI Crude has just breached the 50-day line. The U.S. Dollar Index's recent strength pushed the greenback above its 50 dma (but still below the key 200 dma), whereas the U.S. dollar/euro exchange rate has fallen below its 50 dma (but still above the 200 dma).
Gold bullion remains comfortably above all the key moving averages, while the 10-year Treasury Note yield has breached the 50 dma but still has some way to go to give a primary sell signal and the commencement of a secular bear market by crossing the 200 DMA.
I've been warning for some time that "risk off" could be the order of the day for a while and remain cautious regarding risky assets.