Saturday, February 28, 2015

MTU Weekend Ed. - Monthly Outlook Update (2/27/15 close)

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

SP500 achieved a new record high of 2119.59 in February. We track the recent advance as the blue wave [3] or the green wave [5] in Chart S1. Chart S2 presents details of the final phases of blue wave [3].

Note that the pullback this past week is testing important near term support levels as highlighted by the green lines in Chart S3. The outcome of this retest may help us assess whether SP500 is at the end of wave [3] or at the beginning of wave [5]. A breakout failure increases the likelihood of wave [3].

The two long term tracking scenarios for the 10Y Treasury yield index remain unchanged. See Chart B1.

The USD index, in February, delivered an inside bar on the monthly time frame, keeping the two intermediate term tracking counts on the table (Chart $1).

The USD index may also be about to reveal its long term trajectory (Chart $2). A convincing break above the green line in Chart $2 could suggest higher highs and potentially new all-time highs to come. A rejection by the upper red line in Chart $2 lends support to a bearish diagonal triangle from the 1980s high. Wave E-down of the potential diagonal triangle could coincide with a fib-618 retrace of the 1980 high, which is around the 60s.


Last month, we observed that "Gold, in USD terms, needs to clear the June 2014 high around $1350 to break above its two-year range. Otherwise, Gold remains susceptible to several bearish scenarios to conclude wave C off the 2012 high." See Chart G1. Gold managed to rise to just above $1307 before reversing nearly $100 this past month. See Chart G2. So keep an eye on various bearish scenarios as outlined.

There is a chance that Gold($) indeed bottomed in 2014 and Chart G3 tracks February's pullback as a wave two retrace against a leading diagonal triangle wave one off the 2014 low.

This scenario gains additional support if the lateral support in Gold priced in JPY and the trend channel support in Gold priced in euro, as highlighted by the green lines in Chart G4 and Chart G5, can hold.