MTU Weekend Ed. - Monthly Outlook Update (1/31/14 close)

Stocks, Bonds, USD, Gold

Stocks-

As discussed in It’s TIME (1/24/14), we are tracking a major top in stocks either already in place or to show up in the March-April timeframe based on price structures and time cycles. Odds favor a March-April high. January’s 3.56% sell-off in SP500 and this past week’s volatility have not changed the bigger picture. Chart 1 illustrates.

At the moment, stocks appear to have entered a volatile range in an effort to find at least a short term bottom. It’s probable that the low is already in or is just about to be in place. The structure of the sell-off resembles that of a flat, especially if several benchmark indexes are examined. Chart 2 illustrates.

Interestingly, the price structure and the associated market sentiment remind one of the 2011 pullback. The similarities helps one to pinpoint where the market is.   See Chart 3, which hints at strong upswings.

Bonds-

Bonds have rallied over the month from oversold levels and on weakness in stocks.

The 10Y Treasury yield is wrapping up a small-degree five-wave decline. Logical counts are either a six-month rally in bonds toward lower yields (Chart 4, red) or higher rates on the conclusion of a (running) flat in yields (Chart 4, green).

If stocks are ready to turn higher as discussed above, bond prices are likely to fall.


USD-
Despite the excitement in stocks, bonds, and EM currencies, USD is largely rangebound relative to other major currencies (Chart 5). The USD index looks bullish near term (Chart 5), but advances are likely to face long term resistance (Chart 6).

Gold-
We observed a month ago that "Gold is bottoming. The next move is likely an advance towards 1400 to 1500."  Chart 7 and Chart 8 update. 

For the near term, gold is likely to experience price pressure as prices are approaching resistance. Near term outlook for stocks, bonds and the dollar is also less bullish for gold.

MarketTiming Update (1/31/14)

[950am] SPX/INDU update -
Tracking counts. See charts.

[720am] ES update -
Month end. YM broke to new lows. ES low barely holding. and NQ sits comfortably above its prior low at the moment. See charts.

Market Timing Update (1/30/14)

[EOD] Stocks -
VIX closed below its BB. SPX retraces about 0.382 of its decline, NDX about 0.50, and the Dow lags.

[730am] YM update -
up

Market Timing Update (1/29/14)

[210pm] SPX update (post-FOMC)-

[105pm] SPX update (pre-FOMC)-

Market Timing Update (1/28/14)

[EOD] Stocks -

[705am] NQ,YM update -

Market Timing Update (1/27/14)

[EOD] Stocks -

[1050am] SPX update -
see charts.

[710am] ES update -
ES rebounds back into the prior expanding channel. Let's see if it holds.  See charts.  See It's TIME (1/24/14) for thoughts on the larger count.

MTU Weekend Ed - It's TIME (1/24/14 close)

Near term price patterns
January's sell-off in stocks is in line with our longer term outlook (see 2014 Outlook(12/29/13)).  However, there are reasons to suspect that the real top is still a few months away.

Despite the plunge in stocks over the past two sessions, near term price structures in benchmark indexes appear to be flat-like structures with well-formed fib ratios.  The "event-driven" (i.e. emerging markets) and emotional nature of this sell-off reminds one of wave E of a triangle, if one can be identified (see our analysis of time below). The entire sell-off is likely to be retraced in full.

Chart 1 to Chart 4 present potential expanded flats in SP500, SP400, Wilshire 5000, and Russell 2000. Chart 5 presents a potential regular flat in the Dow. Chart 6 presents a potential running flat in Nasdaq 100.

All about time
The time relationships among advances and pullbacks in stocks since the 2011 low point to interesting possibilities. 

Chart 7 tracks the advance in SP500 since its major low in 2011 as a diagonal.  The (bearish) red count assumes that stocks have topped, while the (bullish) blue count assumes one more push higher.  The bullish blue count is appealing based on near term price patterns (see observations above) as well as time relationships. 

Based on the (bearish) red count, advances in wave A and wave E are about equal in time while the advance in wave C takes about twice as long. Furthermore, the top came in at about the time wave E and wave A reach time equality.

Based on the (bullish) blue count, all three advancing legs (waves A, C and E) take about the same amount of time.  Wave B is a running flat and wave D is a skewed triangle, both of which have a bullish tilt which are reasonable in this (dip-buying) market.  Based on time equality, wave E is expected to top out in March-April 2014.

Wave D of the blue count ended at the Octobaer 2013 low. As such, Chart 8 tracks the advance since then.

[green] Wave [b]-down of E-up of the blue count in Chart 7 is once again a skewed triangle. January's sell-off is its wave (e).  Wave [c]-up is next.

[purple] Wave [b]-down of E-up of the blue count in Chart 7 is an expanded flat highlighted in Chart 1. January's sell-off is its wave (c). [c]-up is next.

[red]  Wave E-up of the red count in Chart 7 is an expanding ending diagonal.  The top is in.

Market Timing Update (1/24/14)

[955am] SPX update -

[710am] ES update -
ES touching its MA50 with the overnight drop. Potential support at MA50 and the end of a small-degree impulse wave. See charts.

Market Timing Update (1/23/14)

[EOD]Stocks -

[1135am]SPX update -

[715am]ES update -