September Prospects

Also last week the major US stock markets like the NASDAQ-100 and the S&P 500 remained in a very narrow low-volume trading range. From Tuesday on (after US Labor Day) the volume will return to the markets. Moreover, September offers a spectrum of political (also monetary-political) data so the trading range will increase as well.

In terms of cyclicality September is the traditionally weakest stock month. Since 1928 the S&P 500 has been up only 45% of the time in September with an average loss of -1.1%. The customary September weakness uses to prevail from the 2nd September trading week lasting for the whole rest of the month. Then the downtrend uses to continue through the middle of October. Rather by the end of the month October produces its lows being concurrently the low of the second half-year before the traditional year-end rally starts from the October lows.

But the fact that since the yearly highs marked on 08/21 both mentioned indexes consolidated narrowly below their yearly highs is now a harbinger that they will NOT(!!) follow the typical course sketched above. Now I’m pretty convinced that with a high probability the cyclical course of the average seasonal pattern for the 4th year of the Presidential Cycle will prevail.

Certainly, in this cycle since 1928 September is still showing an average loss of a -0.7%, but anyhow there’s a 57 % chance, too, that September is going to be an up-month, so we’ll rather see a month of consolidation, or with just a minimum minus! In addition the seasonal pattern for the 4th year of the Presidential Cycle is pointing to “just” one significant low by the end of September from where afterwards the traditional year-end rally can begin.

The S&P 500 in the weekly time frame has fought its way up to the 2nd double arc. The last closings within the 2nd double arc makes this double arc become a real support for the market; deep corrections or a – really frequent – September crash are technically to be ruled out. Not before the market shows a weekly close below the lower line of the 2nd things will turn critical for the bulls since in that case the actually very strong weekly support formed by the space between both lines would be left.

At the year-high, the 4th red circle, the index newly reached the dominating resistance Gann Angle. This one forced the market into a consolidation at the highs now. For the first time since the June lows we see two down weeks in a row.

Admittedly the emerged rebound energy from the resistance Gann Angle is very meager rather forecasting a slightly negative sideways tendency for the next 3-4 weeks. Since on the one hand – as mentioned - there’s still a lot of space downwards, until the lower line of the 2nd and on the other hand both horizontal supports that start from the intersection point of both lines of the 2nd double arc with the beginning of the setup (1397 and 1375) are lying underneath the market now it’s very difficult for the market to turn down going over to a profound correction

The support function of the 2nd is strong and not being supposed to allow a significant weekly close below the 2nd. The maximum our short-engagement is supposed to result in is a touch with the extremely strong 1*1 support Gann Angle sometime within the next 2-3 weeks. Thus the main target for the weekly short-position changed considerably! We’ll cover the shorts at 1375 MIT (marked if touched). A weekly close below 1397 will activate 1375. It will take a weekly close below the 1*1 support to open further correction potential. But maximally at 1370-1360 any September correction is supposed to finish!

The 1375 are a strong support magnet that isn’t only put out by the weekly above but also by the monthly 3 candle up setup:

The market closed August within the 3rd double arc again. That confirms newly that the 3rd is going to penetrate above soon! We’ll buy the market in case of a monthly close above the 3rd with main target 1528 until spring 2013. The actual year-high – exactly on the upper line of the 3rd! We recognize no significant rebound energy from the upper line of the 3rd. Furthermore the S&P 500 closed narrowly above the 2*1 angle. Its’ not significant, but it’s something. The possible re-conquest of such a significant Gann Angle is an expression of extreme power… The market might accelerate its trend even now in September!

The August candle cements bombproof the actual support function of the lower line of the 3rd. The August open is narrowly above the lower line of the 3rd. And since the candle body is white the support function of the lower line of the 3rd is confirmed now. It is at 1376 for September!! The same price magnet in the weekly and in the monthly charts is an unmistakable indication for us that any September correction should have to be finished there.

The reason for the supposition that the markets are going to see a pretty carefree September and October going up on the whole through spring 2013 and even leading to an unambiguous monthly GUNNER24 Buy Signal in the NASDAQ-100 is AAPL:

No more questions… NASDAQ-100 and S&P 500 are extremely AAPL-infested. Technically any analyst in the world would only have to regard this stock using the setup above to understand why the major US markets could only go upwards and have to keep on doing so…

The unequivocal AAPL close in the monthly chart above the 4th double arc is now activating the 5th double arc as the next target. The next main target is 762 now. The US majors cannot turn down before AAPL has finished!

Please pay attention to the monthly candle count. 13 candles initial impulse. There are some important lows near the 21 and exactly at the 34. Ergo the next important low may be near the 55. And that means that the next important top could not happen before the months 49/50 – which is from February/March 2013.

For September 2012 the resistance Gann Angle is at about 695$. Not before this angle is newly touched AAPL can lead into a several monthly correction – such as occurred after the last touch with this angle. Each touch with the support Gann Angle should be considered as a present.

The actual NASDAQ-100 buy signal:

The unambiguous closing above the first monthly double arc is the next buy signal – long at 2772. Target for the longs is the 2nd double arc at 2995. SL is a monthly close below the 2*1 angle. Any September correction is expected to come to its end near the lower line of the 2nd at 2665. A September correction can thoroughly be derived from this setup.

The August highs are close to a cross resistance that may lead to a temporary weakness. As well as in the case of AAPL the actual breakout above the dominating double arcs should first be confirmed by the NASDAQ-100 which means a possibly more extended test of these double arcs to affirm them finally as to be important supports.

Let’s go just very briefly to the precious metals, especially gold

In the last issue I drew up a detailed analysis on gold, silver and platinum pointing explicitly to the positive seasonality aspects. September is THE precious-metal month per se!

The positive developments since the Bernanke’s Jackson Hole speech on Friday substantiate the analyses of the last GUNNER24 Forecasts expressly. August closed far above our monthly long-entry trigger that was at 1655. As analyzed last week we went long at 1692, with first target 1755, main target 1845. SL is a monthly close below 1555.

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Furthermore… whereas the breakouts from the extremely long consolidation patterns of the week before last were still a matter of short squeezes the late-Friday rallies should/might be true buying of the big players! That means in plain English that perhaps during the entire month of September we may see strong weekly performances being limited the single corrections to maximally 3-4 days and turning out moderate and poor and continuing being taken the “technically strong” resistances very quickly without much defense… maybe even the 1735.

Here’s again the most important chart of last Sunday. You know, target for this swing are the 1735 in September which is the most critical resistance. It’s the most important resistance in the weekly time frame.

After being pulverized the very important monthly resistance of 1655 now the following setup is showing us the extreme signification of the 1735 mark in the monthly time frame as well.

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