Stocks at or Near Short Term Low - 10/4/09

Stocks

Stocks appear to be at or near a short term low. The Dow has pulled back to the 50 day moving average and trendline support. Most likely, this will bring an upmove that will test the trendline connecting the September tops(shown on chart). That could happen by the end of the week. A close above that trendline should bring a test of the September 23rd top. A close below Friday's low would be bearish.
Chart: Dow Industrials three month chart, Click to enlarge.


Gold

Gold completed a zigzag at the 9/25 low(one trading day before the 9/27 - 9/28 swing cycle date) . It will probably move up along with stocks this week.

Stocks Update - 9/27/09

Stocks made a top on Wednesday per the 9/20 blog post forecast. The price target for the top was not reached but the minimum requirements for five waves up were met per the 9/23 blog post. The top of wave five only has to go one tick above the high of wave four for the count to be valid and wave structure trumps price targets when a wave is completing. The forecast was for 250 points up on the Dow from the end of wave four to the top of wave five and the actual number was 138 points up. From the low of wave four to the top of wave five the move was 250 points, so that was an interesting coincidence.

The next swing cycle date is Monday, 9/28, so wave a down from last weeks top may end by Tuesday with sideways or higher price action to the end of the week as wave a is retraced. The correction started with a key reversal on Wednesday, but so far seems fairly mild. So it is to early to determine what the wave count is from the March low to last weeks top.

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.