Enough is Enough

All the important stock markets we track closed at multi-year highs on Friday. The new all-time highs in the Dow Jones are the highlight of the week. Here in Germany and in all Europe the 8000 in the DAX lubricated the conversations well. The secondaries out-performed the blue chips again.

Undoubtedly the stock markets are in their respective uptrends that haven’t nearly had it, not topping out finally before spring 2014. In the short and medium terms it’s been enough now! Shorts are on the agenda now, since they have got an excellent risk-reward ratio. Upwards there isn’t much room left. By next week the indexes are likely to top out starting then to turn down and correct at least for 2-3 weeks or consolidate on a relatively high level respectively.

Actually it’s unnecessary to mention that the markets are completely overbought… some of the breath indicators are on their highest levels of the last 3 years… that doesn’t benefit the shorts but as a supplementary information. It’s more important for us to have some Gann Magnets that indicate when we can get down to a pretty riskless short-entry in terms of time as well as price:

Let me first analyze the actual weekly situation of the S&P 500. We forecast the market with the help of the weekly 5 Candle GUNNER24 Up Setup that records the extension in price and time of the very first 5 week initial impulse for the further future, starting in October 2011. With the initial impulse all the important Gann Magnets are pre-defined and stipulated for the future, such as horizontal and diagonal supports and resistances, the Blue Arc and the five double arcs, the 25 most important squares that affect the price within a trend as well as important time lines and the Gann Angles. Then we trade after the price performance at these important Gann Magnets.

3 weeks ago the market reached its actually most important weekly main resistance. Main resistance is the area from the lower line of the 3rd to the upper line of the 3rd. Correspondingly, at 1528, the Buy Target (BT), with a plus of a 4.38 % we covered our weekly long-position we had gone in on October 23 2012 at 1416 index points.

In the issue of 02/24/2013 of the free GUNNER24 Forecasts I presented my detailed assessment on the main resistance of the S&P 500 that is very, very important from my point of view. For refreshing and to underline the importance here’s again my verbatim reflection on this 3rd double arc:

„==> Watch out: The expected long-lasting resistance of the 3rd double arc in the weekly time frame on the S&P 500 makes long-engagements extremely risky now for investors and those traders who are aimed at medium or long-term trades! Only the last gamblers, gamers and penny-pinchers are still long now. Even though it’s possible that a pretty harsh, quick exhaustion move up to 1548 (next higher super-resistance at the upper line of the 3rd) may happen, for the next weeks or even months I don’t expect that the 3rd can be long-lasting broken upwards on closing price basis.

That means concretely: At best a very long and persistent topping process is to come now that is likely to be dominated by the resistance of the 3rd double arc, so it goes rather sideways with down tendency for weeks on a high level.

Or respectively in the most brutal extreme case the potentially very strong and long-lasting temporal resistance of the 3rd double arc will force the market down now for months. The 3rd may lead to a mighty change in trend. Since the temporal resistance of the 3rd won’t expire before the autumn of 2013, very low prices may be the obligatory result – 13xx. As a matter of fact, I don’t really expect this scenario to happen…“

According to that analysis/assessment, now that with last week’s price performance the lower line of the 3rd was taken upwards as well as the next higher weekly horizontal resistance at 1550 (this natural resistance arises from the intersection point of the upper line of the 2nd double arc with the beginning of the setup) was taken by the last weeks close of 1551.18 index points, shorts on weekly basis (i.e. shorts in the medium-term time frame) are becoming more and more profitable.

Now the market is very likely to head for the upper line of the 3rd. This one is situated at the combined daily and weekly 1562 Gann Magnet for next week. 1562 is going to be the next important weekly resistance. That’s where we’ll want to go short – market if touched – weekly position. Target for the shorts will be reaching the support Gann Angle at 1472. There’ll be no stop loss. Even though the market overshoots the 1562 a little bit in price, the main resistance of the 3rd won’t be to be overcome persistently in terms of time pressing it down temporally during the coming weeks.

Either the price will correct downwards within the lines of the 3rd or the time factor will keep the price down even though we’ll see closing prices above the 3rd. I.e. in this case the price would have to correct downwards above the 3rd – just like it did after the break of the 1st AND the 2nd double arc in the weekly 5 Candle GUNNER22 Up – blue bows!

In the daily time frame we realize that the S&P 500 went up to 1530.94 after the final break of the 2nd. This price mark is corresponding to the resistance of the lower line of the 3rd in the weekly setup. As it were, from the weekly resistance it retraced classically to the 2nd in the daily time frame It classically re-tested its break of the 2nd double arc bouncing then from the combined Gann Magnet – intersection point of the upper line of the 2nd with the ruling Strongest Support Angle – up to the 3rd double arc.

Regrettably our first short-attempt on daily base at 1502 that was triggered on 02/21 with target 1472 went belly-up. The expected ABCDE correction turned out as a weak and very short ABC correction…

The daily shorts were covered at the SL of 1531 on 03/05. A loss of -1.89 %.

With the daily close above the lower line of the 3rd the alternative uptarget of 1548 index points was overshoot, thus being activated as the next magnet/resistance the upper line of the 3rd at 1562. In case of this combined daily and weekly resistance we’ll go short with the weekly position.

Please pay attention to the “Strongest Support Angle” in the daily 9 Candle GUNNER24 Up now. In this upswing it was tested twice, once at the Blue Arc and then at the 1488 test of the 2nd – green ovals. It will take a daily close below this “Strongest Support Angle” on daily base to confirm that the market really does want to correct/having topped. We’ll use it as a trigger for building a second, the daily short-position. We’ll short any daily close below this angle – next week, the week after next. No SL. Target for the shorts will be the strongest combined weekly and monthly support at 1472.

In the GUNNER24 Forecasts of 03/03/2013 you may read up everything on this monster support and why the 1472 is supposed to stop any decline in March and April. In case of a possible reach of 1472 it will be a MUST to change into longs again – in every time frame!

Gold view:

For many weeks and months I’ve held the opinion that gold, silver and the miners won’t be able to rise again before the participants of the market switch again from the stocks into the real values. Since the last mighty sell signal in the monthly time frame generated in December 2012, a possible stopping and turning point for the gold decline, a Gann Magnet indicating us when the bulk of investors consider this turn as to be necessary was the 1*2 Support Angle in the ruling weekly 13 Candle GUNNER24 Up Setup:  

It was on 02/17 when I last analyzed the current gold downswing in the weekly time frame expecting then at least 1570 with the aid of the ruling weekly 13 candle up setup. And with the aid of the elliptical weekly 20 candle up we were able to define the expected downtarget even more exactly to 1556:

Well, exactly 1554.3 turned out. Since then a counter-move from the weekly 1*2 Support Gann Angle has taken place. As matters stand today the developing since the 1554.3 lows at the 1*2 Support Gann Angle is not looking very promising. Indeed the weekly 1*2 Support Gann Angle is stemming the decline, but hitherto no rebound from this extremely important angle is to be seen.

But with this second test of this angle – last Friday 03/08 at 1560.40 – the following scenario might develop that is sketched in the chart below. But please don’t misread me. Things might happen like this, but they don’t have to. Anyway, the following scenario with target 1755 still requires a chart-technical confirmation:

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