Saturday, November 30, 2013

Monthly Outlook Update (11/29/13 close)

The advance since the October low in SP500 may have topped at the recent record high (Chart 1, blue) or is missing an overthrow of a potential ending diagonal triangle (Chart 1, green).

As discussed in Potential Pullback (11/22/13) , from a bearish perspective, the near term price actions also complete a double three (double zigzag) structure off the June low (Chart 2), which in turn offers to complete a larger double three structure since the 2009 bottom in stocks (Chart 3, blue).
This bearish interpretation of the 5-year advance suggests a deep pull back or a full retrace.

A bullish interpretation of the 5-year advance has the pending high as a wave three (of uncertain degree). See Chart 4-green.  This interpretation suggests shallow(er) pullbacks, perhaps toward the 1650 area. 

Long dated U.S. interest rates, as proxied by the 10Y Treasury yield index, are tracking a fifth wave north (Chart 5, green) or a subdivision south to complete an EDT (Chart 5, red). Chart 6 shows how these near term structures fit into the long term picture. Odds continue to favor higher yields at the moment.

US Dollar
Recent strength in the USD index raises the prospects of a multi-year upward flat (Chart 7, black [c]) as the squiggle count on the daily chart (Chart 8, blue) hints. At this stage, the burden of proof is on the bulls, as a five-year overhead resistance represents a major challenge. If USD fails to break above, various long term triangles highlighted in Chart 7 are at play and the dollar could be stuck in this wide range for the next year to two.

Gold has drifted lower to retest its June low, making a potential truncated 5th wave premature.

At the moment, the June low is holding, barely. Thus, on the bearish side, we track a head-and-shoulders target area around 1150 or a much higher low if the subdivision lower turns out to be an ending diagonal triangle. See Chart 9-red.

At the same time, the decline in gold prices exhibit personalities of a corrective retrace (Chart 9-blue).  Thus, on the bullish side, we track at least an upward flat.

Chart 10 updates the larger tracking counts.