T-Bonds, Gold Update - 9/25/09

T-Bonds/TBT

Has made a slightly lower low below the 9/11 low. However this does not change the outlook that at least a multi-week low is forming. It appears that wave iv expanded into a triangle with wave v about to complete by early next week. Also, the initial target price near 54 remains the same.

Chart: TBT six month chart, click to enlarge

Gold/GLD

GLD went below Mondays low on Thursday. Another swing cycle zone is due 9/27 – 9/28 although cycle indicators have not been as reliable lately. Apparantly the previous swing cycle zone brought a top one day early on 9/17 instead of a bottom on 9/21(and could be making a bottom one day early today). Otherwise gold still looks bullish longer term and the comments from 9/20 still apply:
“it has not yet reached the target for the upmove out of the triangle which is 105.5 on GLD. Overall, the [short term] outlook is not nearly as clear for gold as it is for stocks. A correction from here should be fairly mild until the next upleg begins."

Stocks Have Met Minimum Requirements for Five Waves Up - 9/23/09

Stocks have met the minimum requirements for five waves up from the 9/2 low even though the price targets have not been met. If the top is in, the severity of the decline should determine the wave count from the March low, per Sundays post.

Gold / GLD - 9/23/09

Gold may have made a low for the week on Monday during the 9/18 - 9/22 cycle reversal zone. If so the count could be wave two from the wave one top on 9/11. It would also indicate
wave three is in progress with a minimum target of 105.5 on GLD.

Gold / GLD - 9/20/09

Gold could have made a top on Thursday one day before the 9/18 to 9/22 swing reversal zone but it has not yet given a technical sell signal. Also, it has not yet reached the target for the upmove out of the triangle which is 105.5 on GLD. Overall, the outlook is not nearly as clear for gold as it is for stocks. A correction from here should be fairly mild until the next upleg begins. Gold has also tended to trend in the same direction as stocks recently which could indicate it will move sideways or make a lower high next week as stocks are moving up.

Stocks: Top Next Week Looks Probable - 9/20/09

From the early September low, the wave count shows three waves up have been completed with wave four in progress, to be followed by wave five next week. The wave three top was just under 1075 which is within the 1069-1075 resistance area given Wednesday. On the s&p500, the price target for wave five is the 1088-1095 resistance area. On the Dow Industrials, this corresponds with the 10009-10074 range. The 50% retracement of the entire decline from the 2007 high is 1121 plus or minus 30 points(1091– 1251) on the s&p500 and 10334 plus or minus 265 points(10069-10599) on the Dow. The price overlaps between the two price zones are 1091-1095 on the s&p and 10069-10074 on the Dow which are the most likely price targets for the wave five top. The current cycle reversal zone of 9/18 to 9/22 ends Tuesday and is the most likely time for the top. If that is the correct timing and outlook, the Dow would need to rally 250 points by Wednesday from the end of wave four(probably on Monday).

It will be possible to count five waves up from the March low to next weeks probable top. If so, it would probably be either wave (1) of primary wave one, or wave (a) of a corrective zigzag from the March low. Either count would be followed by a substantial correction, equal to or larger than the mid June to early July decline. It is also possible it is in wave 3 of (3) of a larger primary wave one, however the first two counts appear more likely. This bullish third count would bring a milder correction off the wave five top or even a continued move higher without a correction.


Chart: S&P500 one month chart, click to enlarge