NEW YORK (TheStreet) -- The yield on the U.S. Treasury 10-Year note tested another new all-time low at 1.377% on Wednesday. Comex gold stabilized around my annual pivot at $1575.8 per the Troy ounce. Nymex crude oil prices drifted lower before starting a European Central Bank and quantitative easing, or QE3, rally on Thursday. The euro versus the dollar set a two-year low at 1.2045 on Tuesday, then rallied to above 1.2300 on Thursday.
There are divergences in the charts of the major equity averages that need to be sorted out. This is the fifth week in a row that the S&P 500 enters Friday on the cusp of my annual pivot at 1363.2. Weekly closes have been below that key level.
Here is my analysis of the major markets:
Yield on the 10-Year Treasury Note.
(1.429) -- There are no technical signals that indicate the "flight to quality" will end anytime soon. However, the 10-Year yield could back up to my semiannual and quarterly value levels at 1.853 and 1.869, respectively, given weekly closes cheaper than my semiannual pivot at 1.389, which was tested with a record-low yield set this week at 1.377.
($1614.9) -- Recent weakness in gold held above its post-bubble December 2011 low of $1523.9, as my annual pivot at $1575.8 provided a stabilizing force. Gold closed above this pivot four weeks in a row. If it closes today above its five-week modified moving average at $1596.1 today, the weekly chart shifts to positive from neutral. Given QE3 and action by the ECB, gold could rebound to my semiannual risky levels at $1643.3 and $1702.5. The daily chart has also improved technically, with gold above its rising 50-day simple moving average at $1589.2 with the 200-day at $1657.8.
Nymex Crude Oil
($89.41) -- The weekly chart for crude oil remains positive with a close today above the five-week modified moving average at $88.10. The upside in anticipation of QE3 and ECB money printing is to my monthly and annual risky levels at $100.47 and $103.58.
The euro vs. the dollar
(1.2280) -- The weekly chart shows an oversold euro versus the greenback. After setting a multi-year low this week at 1.2045, a close today above last week's high at 1.2320 is a weekly key reversal. If this is followed by a close next week above the five-week modified moving average at 1.2465, the weekly chart would shift to positive with upside to my semiannual risky level at 1.2917.
Dow Jones Industrial Average
(12,888) -- My annual value level is 12,312 and my monthly risky level is 13,473. A close today above the five-week modified moving average at 12,750 keeps the weekly chart positive.
(1360.0) -- The weekly chart remains positive with a close today above the five-week modified moving average at 1350.2. Even so, we need to see a weekly close above my annual pivot at 1363.2 to gather upward momentum. SPX has closed below 1363.2 since May 11.
(2893) -- The weekly chart remains positive given a close today above the five-week modified moving average at 2910. My annual value level is 2698 with my monthly risky level at 3058.
(777.11) -- The weekly chart remains positive given a close today above the five-week modified moving average at 789.41, which is a stretch. My semiannual value level is 686.25 with my annual risky level at 836.15.
Dow Transportation Average
(5007) -- The most important charts this week are the daily and weekly charts for Dow Transports, and their negative divergences.
The daily chart for Dow Transports shows declining momentum (12x3x3 daily slow stochastic) with Thursday's close below the 50-day and 200-day simple moving averages at 5072 and 5080. This is a bearish formation, as the 50-day has just crossed below the 200-day in what's called a "Death Cross." If this formation stays in play, I will focus on the Dow Theory Sell Signal I discussed in
posted on July 25. The all-time high is 5627.85 set on July 7, 2011.
The weekly chart for Dow Transports shows declining momentum (12x3x3 weekly slow stochastic), and a close today below the five-week modified moving average at 5127 shifts the weekly chart profile to negative from neutral. The downside risk is to the June 4 closing low at 4847.73. A daily close below this level sets up the possibility of the Dow Theory Sell Signal, which needs the Dow Industrial Average to close below its June 4 close at 12,101.46.
The weakening global economy has slowed package deliveries around the world. Renewed crude oil speculation following money printing under QE3 and the ECB pledge will increase fuel costs, hurting the transportation sector even more. This is why Transports are an important market indicator at this time. A major reason why QE1, QE2 and "Operation Twist" have failed to help the economy is commodity speculation. This is why Fed policy has been a failure!
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.