Saturday, August 1, 2015
MTU Weekend Ed. - Monthly Outlook Update (7/31/15 close)
Stocks, Bonds, USD, Gold - key intermediate term scenarios to watch
While stocks appear to be poised for another record high (Chart S1), SP500 is approaching resistane (Chart S2 green trend lines).
We could see a near term pullback before the "real" upswing. The pullback, if materializes, is likely to target the 2050 area based on the gray triangle wave [b] in Chart 2.
The alternative immediately bullish and bearish scenarios are tracked by the blue and the red counts in Chart 1.
There's no change in the near term prospects of the 10-year U.S. treasury yield index - 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).
For the very near term, July's rally allowed the yield index to retest the blue prior base channel line (Chart B1), which has the potential to provide support.
The USD index has now spent 4 months below its 2015 high (Chart $1). Despite the recent bullish momentum (Chart $2), the larger degree pullback could continue to protract in time as well as in price to work off its overbought condition.
July's $100 sell-off in Gold pushed Gold price to the first target based on one of the three tracking scenarios (Chart G1). Gold could be embracing a sustainable bottom (above 1045).
Based on the red count in Chart G1, Gold has fallen from its 2011 high in a downward flat, with wave C being an EDT and July's decline its overthrow. At a larger degree, Gold has now retraced about 50% of the prior rise (Chart G2).
The Green C and Black 5 in Chart G1 mark the other two lower price targets should Gold prices continue to fall.