Hammer. 1, 2, 3 and bought!

Fridays are always that important for signaling. Their close doesn’t only determine a daily, but mostly the weekly close as well. And, being strong the weekly close even generating a buy signal thereby, that is really meaningful – strongly! It points the way to the future, an effect that lasts long, mostly for weeks. It signals an enormous change in sentiment of the market participants. In the case of gold, last Friday’s performance demonstrates that the investors newly trust in gold now. NOW gold is bought again! It will be for a couple of weeks at least…

Certainly I had expected an upwards rise into the 1240-1245 region again, but I would never have supposed gold to be able for maintaining its gains through the close. Hammer... 1, 2, 3, bang and bought! Even a buy signal, or better… a double Buy Candle was there!

This is just the third daily buy signal of its kind since more than 6 months. Thus, the weekly buy signal of last week is now confirmed and handed in later in the daily time frame as well. Please pay attention about this to the detailed gold-analysis of last Sunday (01/05/2014). The gold main target for this countertrend was confirmed again by the Friday action: 1322!

The first significant countertrend buy signal was produced briefly after the summer 2013 lows, at the beginning of July. The countertrend to be expected now is likely to turn out quite similar as this one did, in price and time:

From the June 2013 lows a 3 day initial up impulse arose. The range of the initial impulse is always measured off with the Blue Arc thus getting the extension of the first square (and of course, the other 24 squares of the entire GUNNER24 Setups as well). Thereby, at the same time in an up setup the upper first square line resistance is the first target where a countertrend may come to an end. It is the very weakest possible countertrend. In such a case the price can’t go higher than to the upper line of the first square, then retracing completely the initial impulse and producing new lows situated below the starting point of the up setup.

But above, in the strongest countertrend of the last half year the upper line of the first square was overcome then. That’s what is to be paid attention to for the further analysis, with a so-called triple daily Buy Candle. It’s triple because in one go A) the Blue Arc resistance together with B) the upper line resistance of the first square AND in addition also C) the monthly 1272 horizontal resistance are overcome. So this triple candle has signaled enormous power since it succeeded in taking many important resistances at one day.

By this proven power, automatically all the qualified uptargets are activated for the countertrend:

A) The next higher uptarget of the countertrend, the first double arc is.

B) The most likely uptarget of the countertrend, the 2nd double arc is.

The majority of the countertrends – as to our experience – are just as likely to end at the 1st and 2nd double arcs. Only about a 10-15% (depending on the asset class) end

at C), the maximally possible target of any countertrend, the 3rd double arc, the one and only main target of the countertrend. No countertrend is allowed to go higher in general. If the trend nevertheless takes the 3rd double arc in the course of the trend thus activating the 4th or even 5th double arc of the respective up setup we’ll have – retrospective of course – a confirmation that it can’t be the matter of a countertrend, bit it’s more, a new important trend that will stand its ground for much, much longer time.

Starting from the June lows, in the chart above the strongest, actually a super-strong countertrend developed that even reached the maximally possible main target, the 3rd double arc. Fast and furiously the rally went up to 1434$ delivering a lush 261$ rally. Well, here’s the next, much weaker, countertrend of the second half of the year 2013 showing a rare daily double buy candle at the break of the first double arc resistance.

It starts at the October lows, likewise showing a 3 day first initial impulse:

This double buy candle re-activated the three possible uptargets for this countertrend. But the trend visibly failed already at the second highest countertrend target, the first double arc. The result was a rise of 111$. Starting from the first double arc resistance, subsequently the market fell below the October lows down to the yearlylows of 12/31. It’s interesting that here the yearly lows are certainly affected by the temporal influence that the 2nd double arc emits…!

Let’s get now to the current daily buy signal, the confirmation for the 1322:

On Friday, the upper line resistance of the first square and the Blue Arc broke in one go with a new double buy candle.

All three theoretically permitted, possible uptargets are visualized in the chart. It’s 1272-1274 and the 1322 as the main target, both being monthly resistances and extremely important monthly magnets. And there’s the 1286 at the 2nd double arc, a weekly up magnet.

A) Now the countertrend may newly fail at the first double arc and at 1272-1274. That is possible, but extremely implausible since the current initial impulse is showing now a stronger 5 day initial impulse, contrary to both first countertrends. Besides, from the point of view of the structure the current movement after the lows is rather more similar to the one that started at the June lows. For the structure is showing a pretty solid retracement, starting from the upper line of the first square. Thus it’s got more substance than the super-quick break through this resistance in October.

B) Hence, the conclusion from this analysis is that the first double arc would have to be overcome subsequently, thereby being the 2nd double arc at 1286 the first most likely uptarget.

C) But technically, the time nearly always dominates the price, and we know from last week’s analysis that gold will have to rise now at least through the beginning of February then retracing, afterwards going up again till the end of February and then finally topping out. This time factor is rather pointing to 1322, if D) the 1272-1274 being the important horizontal resistance is taken, the monthly time frame seizing control again and automatically putting out the next higher 50$ increment as the new target. 1272$ + 50$ = 1322$!

Join and make some serious gains with this new strong countertrend. From the current 1248 up to the expected countertrend main target at 1322 we’ve still got fluffy 75$ up. In silver, the outlooks are even shinier. At 25$, perhaps 26$ are the maximally possible main targets. From the current level that would be a 25-30% rise, in as few as 3 months. The stock markets require years for such es, and in cases like that they get the label "Mega Bull-Run"!

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To conclude this issue, here’s the schedule for the US stocks that seems to be pretty vague at the moment. It’s nearly a fact that the markets will have to go up again in January, in their majority being supposed/obliged to throw out higher highs than those ones of 12/31.

Only the way the markets will choose exactly is extremely hard to predict, i.e. when and above all where the upwards trip is starting from again. The reason is the inconsistent performance of the 3 US indexes we track, during the current correction.

The S&P 500 for instance is showing a very different correction pattern since the 12/31 highs than the Dow Jones and the NASDAQ-100 are. The Dow is clearly correcting downwards in a pretty well-ordered way and without much volatility. There isn’t much volatility.

Technically, the NASDAQ-100 wants to go up again, but it is swaying up and down in a zig-zag. For in the S&P 500 a phenomenon is presenting itself that is most difficult to catch. In the daily chart, it is trading within the lines of an important double arc, and as we all know – at least I call it to mind – the space between the lines of a double arc is so to speak a vacuum area that permits just everything. Up-forces as well as down-forces are supposed to prevail with equal rights, sometimes pre-dominating the up-forces even though the market should technically fall – such as happened the last days:

In the well-known daily 21 Candle GUNNER24 Up (last analysis here) the main target of this bull was clearly reached. The 12/31 highs closed within the lines of the main target, the 5th double arc. Then, it really went down compliantly because the lower line of the 5th dragged the market down – as we have to expect. But then it achieved to overcome this resistance, now trading upwards for 4 days not following the rule: the space between the lines is technically resistance having to drag it down.

Though the well known 1854 or 1889 monthly up magnets/uptargets are draging it upwards, at the same time. It’s the monthly magnets that are attracting it. Simultaneously it is situated in a Gann Angle corridor, above limited by the Resistance Angle, below supported by the Support Angle.

These different forces are leading to the formation of a bearish chart pattern, the upwards sloping channel in which the S&P 500 is staying. Technically it should be dissolved downwards. Perhaps on Monday the trigger for that might be present when the Resistance Gann Angle will be newly reached. I mean, the market will have to go there again till Monday or Tuesday. So the 1848.10 is the Monday uptarget, and technically a short is on the agenda there.

But what if the 1848 is broken upwards? In that case the market will super-fast be at 1854, a monthly Gann Magnet. From there it might turn downwards finally following the downwards course of the 5th double arc till the end of January and down to the 1*2 Support Angle (then at about 1760-1770). But also as early as on Monday, at 1848.10 it might start its decline till the end of January

If the up forces = the 1889 magnet want to prevail we will realize that immediately happening a clear daily close above the 5th double arc. If for instance Monday or Tuesday close above 1857 the 1889 will be activated.

If the market declines from the Resistance Gann Angle at 1848-1851 on Monday or Tuesday the upwards sloping daily channel will be most likely to be left downwards. But beneath, the Support Gann Angle of the Gann Angle corridor being supposed to trigger an immediate hefty rebound (1829-1831) will be present already thus facilitating another approach-run to the all-time high including new all-time highs. Below the Support Gann Angle there is the weekly 1820 horizontal support. Not before this one is fallen short within two successive days on daily closing base, the possible maximum downtarget in the daily time frame and the strong 1*2 Support Angle with target 1760-1770 will come into the game!

It will take this signal to confirm that the market will follow all in all the downwards course of the 5th double arc. Not before that signal the correction will take a course about the way as sketched above at the 2nd double arc – likewise in red – as an important double arc – TRICKY!!!

Be prepared!

Eduard Altmann