Friday, July 29, 2016

MTU Weekend Ed. - Monthly Outlook Update (7/29/16 close)

Stocks, Bonds, USD, Gold - key intermediate term scenarios to watch
Major indexes have broken out to new all-time-highs or look poised to to so (Chart S1), which paints an overall upward bias for stocks. Price actions are consistent with three key intermediate term trajectories (Chart S2).

Near term, the visible divergence between the Dow (Chart S3) and SP500 (Chart S4), as well as a spinning top or doji weekly candle in SP500 (Chart S5) deserve some attention.

The 10Y US Treasury yield index succumbed to a new record low since its secular high in 1980s (Chart B1). The regaining of the blue line in Chart B2 on a subsequent sell-off was short-lived. If the blue line resistance holds, 10Y yields are on their way to fulfill the head-and-shoulders target.

The lack of upward momentum in the USD index makes the upswing since its May low a potential X wave or 2nd wave rebound (Chart $1).

Gold has retraced a Fib-0.382 of its 2011-2016 sell-off (Chart G1). Its 2016 high is likely in (blue [v] or green C? in Chart G2) or approaching (green C of an expanding EDT in Chart G2).