Friday, November 28, 2014

MTU Weekend Ed. - Monthly Outlook Update (11/28/14 close)

Stocks, Bonds, USD, Gold

One scenario we have been tracking is an expanded ending diagonal triangle in SP500 since its October 2013 low. See Chart S1 and discussions in Gaps and Triangles Galore (11/21/14) and Topping Squiggles (11/14/14) .

At Friday's high in SP500, the proposed wave [e]-up is now slightly longer than the proposed wave [c]-up.  Wave [e]-up has now satisfied the minimum requirement of an expanding EDT and has also delivered a typical overthrow.

Chart S2 presents our primary tracking counts on SP500 since the October low.
The blue count tracks a regular impulse wave and the green count tracks a zigzag, accommodating wave (a) of [e]-up and the entire wave [e]-up respectively.
The black count tracks a much extended wave (5) of [3]/C or wave [5] highlighted in Chart S5 below. 

Chart S3 presents the corresponding squiggle counts since November.

It's unclear whether the pending high is the entire wave [e]-up OR wave (a)-up of [e]-up which implies a wave (b)-down pullback and another wave (c)-up thrust to new highs. However, we can make the following observations.

[1] At least a pullback is expected under either scenario. The primary support is around 1995.

[2] While price has already entered the topping zone, time has not. Under normal circumstances, it is likely to take wave [e] longer than wave [c] to finish its run. If this is the case, odds appear to favor the pending high being wave (a) of [e]. Wave [e] could take its time, running longer than 5.5 or 7.5 months.

[3] If the market subdivides much above the upper green trend line in Chart S2,  consolidates sideways and increasingly agrees with the black tracking count in Chart S2,  odds then favor the subsequent pullback to breach the October low, based on the larger counts in Chart S5.

[4] For the very near term, squiggle counts  (Chart S3 -green, blue) suggest another brief upswing is likely, although Friday's high could be "it" (Chart S3 - red).  Monitor for a breach of 2046.8 and 2041.28 as logical decision points.   Also see our analysis of the USD squiggles below.

Chart S4 illustrates how this lengthy expanded ending diagonal triangle fits into the big picture since the 2009 stock market bottom. Chart S5 offers our other long term tracking counts.

The 20+ bp rally in 10-year Treasuries in November has not changed the big picture in long term benchmark rates (Chart B1).

After rebounding from the green prior breakout trendline in Chart B1, rates took their time to retest potential multiple support levels in November (Chart B2). The retest is likely to be successful. Expect a multi-month sell-off if that is the case.

The sideways consolidation in the USD index has left our long term tracking scenarios intact (Chart $1). As discussed before, the USD index is likely wrapping up a five-wave advance since its May low (Chart $2).

 A closer examination of the December DX futures suggest that the upswing from USD's October low is either over or nearly so (Chart $3). As the dollar bottomed in October along with stocks, a near synchronized turn in the dollar and stocks is likely.

After a brief false downward break out of its 2-year range, gold (priced in USD) has regained that range and was retesting the range's lower trendline this past week (Chart G1). With positive technical divergence noted on the chart and USD dynamics, this 2-year range is likely to hold for the intermediate term.

Our intermediate term bullish outlook on Gold also reflects the potential implications by price actions of gold priced in Yen and Euro. See Chart G2.

However, as the tracking scenario in Chart G2 suggests, the proposed upswing in Gold is likely wave C of a bearish upward flat and thus unlikely to push gold to new highs.

Thursday, November 27, 2014

Market Timing Update - (11/28/14)

[EOD] Stocks -
Most recent wave, squiggles suggest EDT with EDT complete (red) or wave [iv] done wave [v]-up to come (blue). See chart.
[1050am] SPX update -
squiggles since the Nov 14 low. See chart and compare with ES below.

[11/27/14 850pm] ES update -
ES has been wedging, approaching a small degree wave iii (green) or wave v (blue) off its Nov 16th low (blue (iv)). See chart.

Wednesday, November 26, 2014

Market Timing Update (11/26/14)

[210pm] SPX update-
Tracking counts and squiggles.  See charts.

  [815am] ES update-
potential triangle. See chart and yesterday's EOD update for near term tracking counts.

Tuesday, November 25, 2014

Market Timing Update (11/25/14)

[PS] JNJ (Johnson & Johnson) tracking since 2009 -
In response to Mkt Man: here is one tracking count on JNJ since its 2009 low.

[EOD] Stocks -
Sideways price action over the past three sessions raised the possibility of
[1] a fully extending impulse wave from the Nov 13th low on the bullish side (green count in both charts) OR
[2] a very weak EDT whose wave E is itself a terminal sideways triangle (red count in Chart 1 and blue outlines in Chart 2).

[815am] ES update -

Monday, November 24, 2014

Market Timing Update (11/24/14)

[EOD] Stocks-

[1245pm] SPX update -
squiggles and tracking counts. see weekend commentary for details.

[750am] ES update -
EDT, regular five, or bust. See chart.

Saturday, November 22, 2014

MTU Weekend Ed. - Gaps and Triangles Galore (11/21/14)

The 13.8% upswing in SP500 from its October low is ridden with unfilled gaps and triangles. Since gaps tend to get filled eventually and oftentimes “quickly” and triangles precede terminal moves or are terminal moves themselves, we monitor them with great interest.

Chart 1 highlights 7 unfilled upward gaps in SP500 for the current upswing. 3 of those 7 gaps produce non-overlapping daily bars and the rest 4 are on an intra-day basis.

Note the location of the 3 daily gaps in relation to Friday’s high of 2071.46: 2056.75 (-0.71%), 2001.2 (-3.39%), and 1909.38(-7.82%). Filling these gaps would require a deep pullback. At the moment, the primary support for this upswing sits around 1986.

Chart 2 highlights 3 recent potential triangles in SP500 that shed light on where this upswing may terminate.

The first red expanding triangle is likely wave (iv) of the upswing, also highlighted in Chart 1.

The second red expanding triangle is likely an EDT wave (v), also highlighted in Chart 1. If this is the case, Friday’s high of 2071.46 represents the typical overthrow of an EDT and marks the end of the upswing.

The third blue contracting triangle is likely an EDT wave (v), also highlighted in Chart 1. If this is the case, wave E-up of the EDT is still developing. However, wave E-up should be capped by 2087.72 since this is a contracting triangle.

Chart 3 presents yet another potential long-term expanding ending diagonal triangle discussed in Topping Squiggles (11/14/14). This expanding EDT spans the past 12 months, with the current upswing as its wave [e]-up. Note that wave [e]-up reaches parity with wave [c]-up in price at 2074.13 or 2102 and Friday’s high is 2071.46.

Near Term Wave Counts
Our base case near term scenario is that SP500 is in wave (v)-up off its October low (Chart 1, blue). It's possible that the week-long consolidation in mid-November is a 2nd wave or a B wave (Chart 1, green). In that case, wave 3 or C since the October low is in progress with (much) greater upside potential.

For longer term tracking counts, please see Topping Squiggles (11/14/14).

Friday, November 21, 2014

Market Timing Update (11/21/14)

[340pm] SPX update-
squiggles for weekend positioning . see charts.

[1005am] SPX update-
Tracking counts and a potential expanding EDT. See charts.

[920am] ES update-
New moon. Option expiration. Overnight macro - US, ECB, China. Potential overthrow in ES. See chart.

Thursday, November 20, 2014

Market TIming Update (11/20/14)

[EOD] Stocks-
Bearish squiggles against yesterday's high in Chart 2.  The bullish interpretation is likey E of (v) of an expanding EDT in Chart 1 (black count).

[815am] ES update-
The decline from the high so far is three waves. See chart.

Wednesday, November 19, 2014

Market Timing Update (11/19/14)

[215pm] SPX update-
bearish count against the AM high. see charts.

[1050am] SPX update-
First gap fill of the run. Tracking squiggles.  SPX testing potential support.  See charts.

[720am] ES update-
Potential overthrow, getting there. See charts.