Saturday, July 4, 2015

MTU Weekend Ed. - Monthly Outlook Update (7/2/15 close)

... draft in progress, subject to change ...

Stocks, Bonds, USD, Gold - key intermediate term scenarios to watch

Wilshire5000, Mid-caps, Nasdaq Composite and Small-caps made all-time highs in June, unconfirmed by SP500 and the Dow.  On balance, these new record highs hint that the recent pullback is likely corrective ahead another upswing to new highs. This interpretation is also consistent with the interpretation that the either the blue [3] is yet to complete or the green [5] has been in progress (Chart S1).

Several intermediate term scenarios help track this interpretation. See Chart S2 to Chart S4.

Furthermore, recent pullback is consistent with the historical weakness when the market wraps up the 2nd quarter according to both the presidential cycle and decennial cycle.  See Chart s7 and Chart s8 in Monthly Outlook Update (5/29/15).  July would look bullish if historical tendencies prevail.  See Chart S5 and Chart S6

Once again, the 2015 sell-off in bonds has now pushed the 10-year U.S. treasury yield towards its long-term resistance (Chart B1).  We anticipate either a wave three surge which breaks this resistance (Chart B2 green) or another rally which keeps the 10-year yield within its long-term bearish channel (Chart B2 red).

In Monthly Outlook Update (5/29/15), we observed that "the green wave 4 has lasted two bars and could protract in time as well as in price to work off its overbought condition." Since then, the USD index has moved sideways and the pullback is likely not over in either time nor price. See Chart $1 and Chart $2.

The down trend is Gold($) prices continues.

Chart G1 offers 3 intermediate term target projections based on three tracking counts - Red C just below 1100, Green C around 900 and Black 5 below 800.

However, the near term bullish scenarios are still on the table but fleeting. Within the bullish scenarios (Chart G2), odds appears to favor the more bearish red ABC rebound.