MTU Weekend Ed. - Monthly Outlook Update (1/29/16 close)

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

Stocks
The January plunge in stocks is the "downward thrust" we outlined in 2016 Outlook (1/1/16), although the downward thrust unexpectedly but moderately exceeded the August 2015 low in SPX.

U.S. stocks likely have completed the proposed fourth wave decline, either as wave [4] relative to the 2009 bottom (Chart S1) or wave (4) relative to the 2011 low (Chart S2).   

These two fourth wave at different degrees are relevant in the sense that:
(a) Support from wave [2] (Chart S1) is around 1720 and rising, which introduces the alternative possibility that the January low is wave (a) of [4] as marked.
(b) Support from wave (2) (Chart S2) is around 1865 and rising, which coincided with the January low.

A retest of the lows in early February remains probable but not required (Chart S3, Chart S4) .  Whether the retest is the bullish blue wave ii or the bearish red wave v,  the January low is likely to (roughly) hold since a typical red-wave-i-and-v-equality would suggest a failed red wave v. 

Bonds
The U.S. 10-year Treasury Yield Index is retesting the gray "neck line" (Chart B1). If the H&S pattern, which we think is less likely at the moment, does play out, its target would be a near zero 10-year yield. In an environment where negative nominal policy rates are already a reality, it is prudent to keep an eye on this extreme scenario.

Our base case scenario is that bonds are overbought and long-term rates are likely rebound higher from here (Chart B2).

USD
Our long term tracking of the USD index remain unchanged (Chart $1).  If the USD index does not break out to a higher high in early February (Chart $2 green), a retest of the 93 area is likely next (Chart $2 blue, red).

Gold
Gold is likely in the final subdivision of an EDT (Chart G1). The current upswing in Gold is likely wave (b)-up of wave [e]-down of the proposed EDT (Chart G2). If so, a final sell-off should deliver the overthrow to conclude this EDT. The bullish alternative of Gold having bottomed appears less likely than the main tracking count at the moment.

Market Timing Update (1/29/16)

[210pm] SPX update -
Potential clarity :) The gray count in Chart 2 tracks today's upswing as the end of the first wave up. See charts.

[1025am] SPX update -
SPX once again at resistance. See chart.

Market Timing Update (1/28/16)

[EOD] Stocks -
Bulls and bears are managing the green (support for now) and red (resistance for now) trend lines. See charts.

[1130am] SPX update -

Market Timing Update (1/27/16)

[EOD] Stocks -
SPX likely finished a LDT wave i (Chart 2 blue) and is now in a wave ii pullback. Bearish alternative in red with today's high (can also accommodate a minor higher high) as wave iv. See charts.

[1250pm] SPX update -
Tracking counts. See charts.

[910am] ES update -

Market Timing Update (1/26/16)

[150pm] SPX update-
SPX once again probes the 1905/1910 resistance. Potential triangle (Gray)? Need another leg down (red, blue [x])? May need an overnight gap to gap over the resistance. See chart.

Market Timing Update (1/25/16)

[EOD]Stocks -
Potentially a wave ii or wave (b) pullback in SPX. See charts.

MTU Weekend Ed. - Rebound (1/22/16)

The proposed wave [4]-down (or (a) of [4]) may have completed this week (Chart 1, Chart 2 blue). A retest of the low remains probable (Chart 2, red), as the wave structures from the low are still ambiguous so far (Chart 3).

Market Timing Update (1/22/16)

[10am] SPX update -
Tracking counts. Did not notice the green squiggle (expanded flat wave [2]/b) yesterday. See charts.

[755am] ES update -
ES is to gap SPX, but is wedging. See chart.

Market Timing Update (1/21/16)

[EOD]Stocks-
One can fit an odd-looking but well-channeled 5-wave advance from yesterday's low to today's high (Chart 1 blue), although a double zigzag (Chart 1 red) appears more acceptable. If the rebound turns out to be corrective, a small wave four or a large X is likely in progress.  On the other hand, momentum picking up that befits a wave 3 will support a sustainable rally.

SPX filled the first gap and is retesting the breakout trend line (Chart 2) in a small degree wave [C], as chances are that this rebound takes more time and price.

[1250pm]SPX update-
Gap hunting is likely in progress. SPX fills one gap (Chart 1). Chart 2 offers tracking squiggles from the low.

Market Timing Update (1/20/16)

[EOD] Stocks -
Wave [4]-down or wave (A) of [4]-down likely ended at today's low (Chart 1). Note that SPX breached but closed above the downward channel from its nominal high.

Today's plunge also likely better completes the decline from 2081.56 from the perspective of wave structures (Chart 2). This decline is likely wave [c] of a flat dated back to the November high.

Moreover, the recovery from today's low is likely an impulsive wave (Chart 3).

Gap hunting is likely next. Let's see if it is sustainable or only a fourth wave (Chart 2 red) or a larger [B] wave (Chart 1).

 [950am] ES update -

Market Timing Update (1/19/16)

[1105am] SPX update -
Squiggles from the Friday's low. Potential IHS. Gap hunting likely begins. See chart.

MTU Weekend Ed. - Bull/Bear Possibilities (1/15/16)

The breach of the August and September lows in the SP500 cash index today (which was old news in smaller cap indexes) opens up several interesting possibilities, all with potentially large swings.   Near term, the market is oversold and bounces can show up any time.  See Chart 1A and Chart 1B and note the interesting Fib-division of a potential flat/123 based on the green label. 

Triangle Failure  - cash index failing, futures holding
The triangle we've been tracking in Chart 2A obviously was never meant to exist, given today's breach of the August low in the cash market.

Interestingly, the August low in futures is still holding (Chart 2B).  So if a sustainable upswing develops soon, we might be able to tolerate a minor breach of the August low in the cash market and continue to track this "triangle".  One simply labels it an (w)-(x)-(y) in retrospect.

In case of a continued slide, since this is a 250-350 point "triangle", the projected drop, even if it is still a part of the proposed wave [4], could easily retest the 2000-2007 trendline or the 2007 top. See Chart 3.  

 

 



Triangle Alive - not so fast, how about this triangle?
The complex leg of the proposed triangle may be wave [c] instead of wave [b]. Wave [d]-up and [e]-down over an election year? See Chart 4. Please note the positive divergence between RSI and price.  This triangle would fail if the October 2014 low failed to hold.

Nah,you got the top wrong
It does make more sense now than before to count from the May top in SP500, given today's breach of the Aug/Sep lows.  We may have simple ABC decline (Chart 5).  Subdivisions lower could target a Fib-0.382 or Fib-0.5 correction of 2011-2015 advance, which is around 1730 and 1605 respectively.

Don't discount this EDT or LDT

The sell-off in SP500 from its nominal high looks like a diagonal triangle (Chart 6). January's even-bomb driven, gap-ridden waterfall decline does have the personality of a E-wav plunge.

Is this a terminal wave (c) of an odd looking flat (Chart 6-blue) or an LDT wave [1] or [A] (Chart 6-black)?  In either case, a sharp upswing toward 2100 is to follow once the diagonal triangle concludes. 

Market Timing Update (1/15/16)

[8 am] ES update -
ES retest lows. Wedging. Potential small-degree 5th wave extension. See chart.

Market Timing Update (1/14/16)

[EOD] Stocks -
SPX is testing the previous downward trend line. See charts.

[1055am] SPX update -
SPX found support after probing the Aug/Sep trend line. See charts.