Stocks and Gold Update - 11/11/09

Gold/GLD

On Monday GLD hit 108.59, which verified the current wave is part of a larger wave three instead of a wave five about to complete, as discussed in Sunday's post. That is bullish with the next price target being around 112.75. Todays close of 109.61 is already more than one point above the 108.59 level with more then three points to go to reach the next target.

As for wave structure, it looks like it is in wave five of the move up from the 10/28 low. Based on that count and cycles analysis, the next price target could be reached sometime between Friday and early next week.

Stocks

Stocks are moving higher with gold and may top in the same time frame. Today stocks went past the 1093 resistance and also the October high indicating the next swing cycle on 11/14 is inverting into a high instead of a low. The wave structure is not as clear as gold but may now be in wave four up from the 11/2 low, to be followed by the final wave five. The 1.27 fibonacci extension of 1121.05 appears to be the most likely price target for wave five.

Also, since the October high was taken out, that may change the preferred wave count. That analysis will be provided in the next post.

Stocks and Gold Update - 11/8/09

Stocks

The s&p500 made a low on Monday at 1029.38, .62 points below the 1030 support level given last Sunday. Stocks then continued higher into the end of the week as forecast with the high of the week occurring on Friday morning. Cyclically, that high could have been the top of this short term up move however the wave structure does not look complete and also the s&p500 is in between resistance zones. We are also currently withing the next swing cycle zone(11/6 to 11/9) so it could go up for 1-2 more days into the next resistance zone at 1074 to 1077, which is not much beyond Friday's high. Next resistance is at 1085 and then 1093.

Gold/GLD

Gold had another good week, moving well beyond the October high and the target price of 105.5. Wave four ended on 10/28 with wave five either complete as of Friday or near complete. GLD is within a swing cycle zone that ends today but could allow one more day of higher prices since it occurs on a weekend. Initial support for a wave two low is 100 to 101 on GLD.

One thing to watch is the length of wave five. If it extends beyond 108.58 on GLD that would make wave three shorter than wave five and wave one, which invalidates the wave count as wave three can never be the shortest wave within a five wave impulse. If that happens it indicates we are within a larger wave three that would bring much higher prices sooner rather then later.

As has been stated previously, the long term gold chart patterns look very bullish and could bring much higher prices. For that reason it is best to do minimal amounts of profit taking at short term tops as the wave counts could be wrong and surprises will tend to be to the upside.

Gold/GLD etf

Below is the updated wave count for GLD that shows wave 4 which may still be in progress. The price low for wave 4 has most likely been made but there may still be more work to do timewise. Gold has held up very well compared to stocks during this correction. In anticipation of that possibility, I moved most of my GDX gold stock position to UGL(2x gold etf) in mid October.


Stocks

The updated S&P 500 wave count is below. The wave count for stocks is not as clear as for gold. It appears the best count puts wave five up from the March low to be at the October high or alternatively at the September high.

Fridays unexpected big down move took out Thursdays low with a price low of 1033.53, 3 1/2 points above the next support at 1030. If 1030 does not hold, the next support is near 1020, and then 990-1000(the strongest area of support). The next swing cycle zone is 11/2 - 11/4, so it appears the market may be making a low into that period as originally concluded on 10/28. The most likely time for the endpoint of an up move off that low still looks like the end of this week.

Overall, it looks like the most likely time and price for the low of this correction is 990-1000 in mid November.

Stocks Update - 10/29/09

It looks like the first down leg completed 3 points above the 1039 support area. The most likely time for the top of this up leg is the middle or end of next week. The strength of the up move will determine if the correction is going to be a flat, triangle or a zigzag. If its's a sideways correction the high of this wave will be somewhere around the October high.

Stocks Update - 10/28/09

The S&P 500 today closed below the 1050 support area. The price action today was bearish and the wave structure does not look complete. This move could continue down into early next week as the next swing cycle zone is 11/2 - 11/4. Next support is at 1039 and 1020. The wave count is still unclear. Best guess is this is the first leg down of a larger correction that may continue 2-3 more weeks. It's not clear at this point whether this is the first wave down of a sideways correction or a zigzag.

S&P 500 Price Targets for Low

Last Fridays post indicated that a short term stock market top was probably made the previous day on 10/15. On Monday 10/19, the S&P 500 made a slight closing high above the previous weeks high. That was the highest closing price of the week with the market now near the lows of the week as this is being written.

Stocks look highly probable to have a continued decline into the early or middle of next week as the C wave of a zigzag completes. The fib price targets for the low are 1062 and 1050.