MTU Weekend Ed. - Monthly Outlook Update (5/29/15 close)

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

Stocks

SP500 rose 1.05% in May (c/c) and delivered a fresh all time high at 2134.7. Meanwhile, a six-month divergence between the Dow (which has been going up) and the Dow Transports (which has been going down) worsened meaningfully in May (See Dow Theory Nonconfirmation (5/22/15)). While this Dow-Theory non-confirmation helps to build a case for the May high in SP500 being potentially a meaningful top (Chart s1), other observations suggest that chances for a new high (Chart s2) are still favorable.

Short of being a leading diagonal decline from the May high, the decline in SP500 so far appears corrective (Chart s3).  The near term decline, however, has the potential to extend somewhat according to the wave structure and as the Dow has already made a lower low.

While the divergence between the Dow and the Dow Transports has accelerated in May, the Dow Transports may be wrapping up a fourth wave pullback (Chart s4) in the form of a downward flat (Chart s5). If so, one can expect a fifth wave advance.

At its May high, the Nasdaq Composite is only 0.25% shy of its Y2K high (Chart s6). Odds appear to favor a new all-time high in the Nasdaq Composite.

Notably, the Decennial Cycle (Chart s7) and the Presidential Cycle (Chart s8) are particularly bullish for the first half of June.

Bonds
10-year US Treasury yield made a higher high around 2.34% and retreated toward potential support (Chart b1).  In addition, the pullback from the 2.34% area is likely tracing out a downward flat (Chart b2).  Under this interpretation, one can expect a wave (iii) of [iii] advance in long term interest rates.

The red scenario in Chart b1 tracks a potential expanding EDT rally in bonds if support is meaningfully breached.

USD

The USD index pulled back the form of a flat (Chart $1) and bounced off potential support (Chart $2, green wave 4), making another attempt at its long term resistance (Chart $3). 

 However, the green wave 4 has lasted two bars (Chart $2) and could protract in time as well as in price to work off its overbought condition.   Under this interpretation, the recent rebound in the dollar is the blue wave X or the red wave 2 if the long term resistance holds.  See Chart $1.  



Gold
Gold price is fighting its down trend since the 2011 top, despite the fact that the 2015 low represents a higher low with respect to the 2014 low (Chart g1). The red and green scenarios highlighted in Chart g1 are tracking well to the downside.

As long as the 2015 low holds, Chart 2g highlights the potential for near term (red) or even intermediate term (black) strength in Gold prices.

Market Timing Update (5/29/15)

[1025am] SPX update -
Short term lines, tracking counts, and squiggles. See charts.

[910am] ES update -
ES probing near term support overnight. Potential small-degree triangle. See chart.

Market Timing Update (5/28/15)

[EOD] Stocks update -
SPX failed to filled the gap during the day session (Chart 1), but ES likely did after the close, . Transports is wrapping up wave C, already satisfying the minimum requirement (Chart 2).

[745am] ES update -
Potential expanding wedge at two degrees? See chart.

Market Timing Update (5/27/15)

[EOD] Stocks -

[1225pm] SPX, TRAN, INDU update -

[745am] ES update -
See chart for the larger structure in ES -
[significant high] blue C, red E or red 1
[new high following a moderate pullback] green [c]

Market Timing Update (5/26/15)

[2pm] SPX, INDU, TRAN update -
SP500 is testing its MA50 which is around 2097. Chart 1 tracks SP500 squiggles. Chart 2 tracks TRAN/DOW divergence and wave structures.

[9am] ES update -
ES is probing the neck line once again. See charts.

MTU Weekend Ed - Dow Theory Nonconfirmation (5/22/15 close)

The recent non-confirmation between the Dow and the Transports caught market participants’ attention. Other topping signs may also be developing, such as another dive in the VIX, negative price-indicator divergences, and a confluence of price-and-time resistance. However, a (near term) bullish case can still be made.

Transports
The decline since the 2014 high in Transports appears corrective and potentially a downward flat (Chart 1). Transports may have been pulling back in a fourth wave, correcting the advance since late 2012 (Chart 2).

Nasdaq

At its recent high, the Nasdaq Composite is only 0.25% shy of its Y2K high (Chart 3). While the Y2K could serve as a long term resistance level, odds appear to favor continued upward probing of the Y2K high, which is about 25bp away.

In addition, the 1.618 fib-extension of the 2007/2009 crash is at 5443.5, which is less than 6.5% away. See Chart 3.

Seasonality
The Decennial Cycle and the Presidential Cycle (in particular) are not bearish for the rest of May. See Chart 4 and Chart 5.

SP500

Market Timing Update (5/22/15)

[EOD] Stocks -

[910am] ES update -
ES continues to probe potential support levels. Potential event-driven (CPI) wave e of a bullish 4th wave triangle as marked by the green lines. See chart.

Market Timing Update (5/21/15)

[EOD] Stocks -
SPX got very close to a new high today but did not deliver. Tracking a potential expanding triangle or complex combo wave 4 on the bullish side or a top yesterday on the bearish side. See chart.

[850am] ES update -
ES is probing the neckline support following an overthrow of the potential red EDT. The IHS target offers an overthrow of the potential black EDT. See Charts.

Market Timing Update (5/20/15)

[EOD] Stocks -
This week offers a window of opportunity for a top if the market wants to. See charts.

[1015am] SPX update -
ABC down from ATH so far. See charts for tracking counts, lines and squiggles.

[735am] ES update -
ES overnight kiss of the lower base channel line. See chart.

Market Timing Update (5/19/15)

[EOD] Stocks -

[1205pm] SPX update -
Tracking counts, lines, and squiggles. See charts.

[720am] ES update -
ES made a new record high overnight. Three waves off the May low is completing, as well as a potential EDT overthrow. If it is a five wave, the IHS presents a reasonable near term target for a larger EDT overthrow. See charts.