Monthly versus Weekly forces

In the last issue I expressed my expectation of a countertrend - starting on 01/26 from the interim-swing high in the S&P 500 at 1333.47 - that was supposed to last either 5 or 8 or maybe even 10 trading days going down to 1287 or possibly just to 1292. But altogether the market corrected only 3 days from the 1333.47 top and to no less than 1300. The fact that the rally got into its stride so fast is proof of internal strength and another confirmation that the trend shall stick to its natural Fibonacci rhythm in the schedule.

The upwards trend has come to its 18th week being supposed to top temporally in week #21 = February 20-24 (or in the close surroundings of week #21, hence #20 or #22. Topping always means A) a final top or B) lower highs. The price level and the kind of the top hasn’t yet revealed to me. Maybe next week there will be more to be recognized. But I think next week, at the next important magnet at 1355, a correction on daily basis will start that might go down to 1334. You see, for six weeks the market has clearly oriented itself by the resistance Gann Angle – that’s where the weekly top is being marked constantly – and the same is supposed to happen next week.

Attention: With a 40% of probability the top in price might occur at 1355 because the minimum target for this trend would be reached which is the lower line of the first double arc. It’s a magnet able to make the market turn definitely.

After a possible correction from 1355 down to 1334 (the actual monthly support, on this score please pay attention to the following chart) I suppose with a 60% of probability we’ll see the last leg upwards seeming to be pretty vague the final price top at the moment. I’m afraid the actual daily 12 candle up (lately analyzed here) is not much use to be called in as a guide here.

If the 1355 is broken upwards on daily basis in week #19 or #20 the 1376 or the 1395 will still be possible in February! In case the 1355 are broken upwards on daily basis we’d be likely to see a so-called exhaustion leg. Targets will be either 1376 or 1395 being preferable this price target in that case.

Thus the 1355 (week #19) but also the 1376 (week #21) or the 1395 (week #21) are offering themselves as to be the price top.

Temporally the actual monthly 3 candle up setup is likewise pointing to the 1400 as early as in February:

With the break of the very important monthly cross resistance on daily basis at 1334 merely optically we all can see that the market is on the straight way to the lower line of the 3rd double arc now, i.e. to the main target of the actual uptrend.

I mean, the main target of the 2009 bull-market is fixed for years – among other things it was analyzed here, too, in 2010:

The target to be reached in January 2012 was forecast in April 2010. In the final analysis the tiny temporal shift is not important. The target was and keeps being the lower line of the 3rd double arc. Questionable is really just A) an exhaustion-top at 1395 (it’s congruent with the 1400 in the monthly setup after all) as early as in February 2012 because:

The momentum might have strengthened again! since the break of the 1334 on daily basis. Since the 1334 were overcome last Friday they are supposed to have mutated to be an important daily support. That’s why a correction on daily basis is supposed to come to its end from there, leading to a new up-leg. As analyzed above, a daily close of above 1355 would facilitate an exhaustion-high at 1395-1400 in February 2012.

If the market doesn’t break the 1355 on daily basis significantly upwards in week #19 the schedule for the S&P 500 should be as follows – B): Top next week at 1355 (week #19). Then a test of the 1334 surroundings and this test may thoroughly go down to 1320 (week #20). Then a new approach run to 1355, in which some lower lows will be produced (week #21). Then a 2-3 week correction to 1287-1260 before the main target at 1385 will be reached in April 2012.

After reaching the main target things will go on as follows:

After reaching the 1385-1400 the market is supposed to turn to a long correction. It’ll go down again to the upper line of the 2nd double arc in the monthly 5 Candle GUNNER24 Down.

Merely "psychologically" seeing, a top in February 2012 would have to make that expected decline to the 2nd double arc appear more brutal because in that case the correction would last two months longer than an April 2012 top perhaps dipping deeper into the 2nd double arc, so possibly being ready to exaggerate again in case of the next low on monthly basis.

So, in terms of price and time the scenario for an exhaustion-top in February 2012 might look like this: Top in February 2012 at 1400 being followed by a "violent" decline until maybe a price low at 1150 by May 2012. For the media, a reason for such a sell-off might be Greece again, but more likely Portugal in addition. Then one to two months of bottom building until June/July 2012. Or:

Some well-ordered highs in April 2012 at 1385 happen with a well-ordered decline down to 1200 including two months of bottom building. Target reached in June/July 2012.

Be that as it may… starting from the 2nd double arc it will go rapidly and brutally upwards then. Year high will take place by the end of the year 2012. Target for the S&P 500is the 4th double arc in the monthly 3 Candle GUNNER24 Up – 1600 until April 2013.

Let’s still have a quick look at the NASDAQ-100, the absolute leader of this stock market rally. Here’s at first the large picture, the actual monthly 8 Candle GUNNER24 Up Setup:

Whereas January wasn’t closed by the S&P 500 above 1340 and by the Dow above 12720 not providing thus a monthly GUNNER24 Buy Signal the NASDAQ-100 did, and it did impressively. With the January candle we see a so-called double buy candle. In one go, it broke through the blue arc and through the upper limit of the first square. So at least until April 2012 target is going to be the 2610. SL for the trade is lying at 2258. If the market wants to go on running it may exhaust at 2640 in February. In any case we’ll cover the longs at the lower line of the 2nd first double arc. Be it in February or in April.

Now the monthly upwards-momentum is rising rapidly. The double buy candle is showing that optically. Overcoming two important monthly resistances in one go is very seldom. But just like the weekly S&P 500 setup the very long-term weekly 6 candle up setup is baring its teeth with next week:

At first we closed our long position with the weekly close (the exit tactics were lately described in this issue). Profit +157 points/+6.62%.

On weekly basis the NASDAQ-100 has reached its natural main target. In such a case there’s always the threat of a reversal. Prevention is better than cure. If it performs now the same way it did at the last important resistance (green 4th double arc) it will have to go a little higher next week. 2445-2449 is the level that would correspond to the 1255 in the S&P 500 before it may turn or before it will be expected to turn, respectively. Target for the possible correction is the weekly support horizontal at 2462.

If it doesn’t correct but overcomes the 5th double arc a new weekly buy-signal will arise, the monthly momentum would have overcome the weekly resistances… If next week closes above 2560 we’ll newly buy with target 2610, maybe 2640 (exhaustion target in the monthly setup. SL is a weekly close below 2462.

If the market corrects to 2462 next week or the week after next turning then up towards the 5th double arc it would be like the weekly S&P 500 scenario described above. There’ll be the threat of lower highs if the 5th makes newly rebound the market. But if the 5th is broken significantly upwards we’ll have to buy because in that case exhaustion until 2640 will be possible.

To sum up we may say that we’re expected to see a ping pong game between the weekly and the monthly time frames the next three weeks being pulled up the markets all in all by the monthly time frame with its natural targets. The weekly setups in the S&P 500 in the NASDAQ-100 with their powerful resistances clearly impede reaching the monthly targets. A daily close of more than 1355 would point to 1400 in the S&P 500 and a daily close of more than 2560 would point to 2640 in the NASDAQ-100.

Gold:

As expected the monthly resistance at 1763 is showing an effect now. A visible correction started on Friday. As a day trader you will have to buy now the first correction of this rebound. The 1763 are supposed to be at least tested again, that is pretty usual at very strong resistances… Technically those ones should always be confirmed at least by some lower highs.

Questionable is really the result of this test of the 1763. A daily close above than 1770 would make the 1800-1805 become the next target on daily basis. And that’s where – merely chart-technically seen – a possible decision is due whether gold keeps on being in a bear market or changes into the bull market again. Not before the bear market high, marked in November 2011 at 1804.40 is overcome we’ll be able to invest in the long term very safely into the golden metal again since from that the prices of far more than 2000$ will develop.

But according to the rules of the GUNNER24 Forecasting Method we can work on the assumption that a monthly close over 1763 (about 1770) which would be a closing price above the very important horizontal monthly resistance will inevitably have to lead to the next higher GUNNER24 Target = Gold would have to head for the 4th double arc again. 1845. The bear-market high would be overcome in the course of reaching the target. Consequently we’ll buy a monthly close above 1770 with target 1845.

A monthly resistance is always very difficult to be overcome being thoroughly able to lead gold back again to the next important monthly support in this case. And that’s the 2008 support Gann Angle. It is lying at 1649 for February 2012. That’s where we’ll newly go into a monthly long-position in case it will be reached. Target in that case would be the 1763 again.

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Be prepared!

Eduard Altmann