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

Stocks - 9/16/09

As with gold, the upcoming cycle reversal zone for stocks(9/18 to 9/22) appears to be inverting into a high instead of a low. Wavecount is unclear. Resistance is at 1069-1075 and 1088-1095 on the s&p500.

Gold Update - 9/15/09

Gold today gave a technical buy signal. This may bring a new high on Wednesday above last Fridays high. That may indicate that the time cycle reversal zone of 9/18 to 9/22 will invert and bring a high instead of a low.

Stocks, T-Bonds, Gold - 9/13/09

Stocks

Stocks advanced last week into Friday as forecast and are now encountering the mid September "time cycle confluence" area first noticed/mentioned here on 8/17/09. The outlook for an ending diagonal triangle still looks intact as the s&p500 made an apparant fifth wave high just under a 1049 fibonacci reistance point. If this is the correct outlook, this coming week should be a down week with a possible swing low around Friday or early the following week as the next minor time cycle is 9/20 to 9/22. Initial downside support is at 1020 and 996 on the s&p with a possible eventual bottom near the July low.

However, the Dow Industrials did not make a fifth wave high last week. This may indicate an intraday upmove on Monday that takes the Dow to a slight new high to complete wave five. This would probably take the s&p500 to the 1049-1055 area as there is another fib resistance point at 1054.
Correction, 9/14/09 9:20 am ct: Actually it was the DIA etf that did not make a higher 5th wave high last week, not the Dow Industrials index, so the last paragraph can probably be ignored as the count on the actual index is more important then the etf.

Treasury Bonds

Bonds may have completed a zigzag high into fibonacci resistance on Friday. In addition, there is a minor treasury bond time cycle that peaked this weekend. This should bring a down week for bonds, possibly into 9/20 to 9/23 when there is a minor time cycle due. Since the CPI and PPI inflation numbers come out this week this could indicate an uptick in inflation will be shown by the reports. It can be played with the inverse T-Bond etf's TBT or TMV(triple beta). The initial upside price target for these etf's is near the August high with an eventual move up toward the June high or higher.

Chart: TBT etf, 6 month chart (click to enlarge)
White horizontal line is initial target


Gold

Gold is in a time cycle reversal area from the 12th to the 15th. It is possible to count five waves up but it may extend a little higher on Monday before reversing. A decline from that top could extend down into the next time cycle reversal area of 9/18 to 9/22.

Stocks, Gold on Track - 9/6/09

Stocks- Stocks declined last week into Thursday/Friday as forecast in last Sunday's post. Stocks have rallied off the low with the Dow up over 96 points on Friday. The market still appears on track for wave 5 of the ending diagonal pattern continuing into next Friday or the beginning of the following week. That period marks the top of the current minor time cycle and has confluence with the mid September major time cycle previously mentioned. Fibonacci resistance for a wave 5 top is at 1049 and 1063 on the S&P500.

Chart: SPY etf, 3 month chart (click to enlarge)

Gold- has been moving higher since wave E completed on 8/17(per the 8/18 blog entry) and had a strong rally last week. This upmove may last into the next minor time cycle that peaks next Tuesday/Wednesday, possibly around $1000/oz(100 on GLD). That would then be followed by a short term consolidation or correction before resuming the upmove.