Technically the stock markets should start to fall now. On Thursday, some very important Gann Magnets in price and time were reached which "necessarily" should have led to a pretty strong rebound from those magnets, hence we should reckon now with a strong decline on daily basis.
This is really not a signal for a promising short-entry now – at least it isn’t as matters stand today because from the bearish point of view the important price and time magnets have got the most unpleasant characteristic to even intensify the existing upwards-trend in case of a break upwards.
As analyzed extensively already – lately in the issue of February 5 – the main targets for this upwards-trend are positioned at 2610 in the NASDAQ-100 and at 1385 in the S&P 500. The only question is – as analyzed there, too – whether they’ll be reached as early as in February 2012 by means of an exhaustion move (targets would be higher in that case, at 2640 and 1400, respectively) or not before the beginning of April in a roundabout way of an extended correction on daily basis.
The important price and time magnets we’ll have to consider now closely, the exhaustion being triggered by their joint break upwards, are the following ones:
1. In the weekly time frame of the NASDAQ-100 here are the highs of the last trading week at 2567.28:
The market reached a triple Gann Magnet. Above at the resistance Gann Angle additionally the important resistance horizontal and the upper line of the 5th double arc are meeting. Triple magnets are always strong enough to release a severe decline. The first target for this possible decline is the support horizontal at 2462. But if next week closes above 2560 the market would be supposed to exhaust until the end of February with target 2640. Correspondingly we would go into another long-position on daily basis.
The weekly close within the 5th double arc confirmed the assumption that the market is going up at least in the medium term, i.e. until April. Technically, a closing price within a double arc prepares a break upwards in a GUNNER24 Up Setup. Target in that case is always the next higher double arc towards the trend. The activation of the target never takes place before the effective break.
2. In the monthly time frame of AAPL the major target at 492 was reached. It had lately been worked
out on January 8, 2012, and for the first time it had on 7/24, 2011. It was reached earlier than expected, but that’s got to do with the clearly visible exhaustion of this stock:
Just consider the length of the last two month candles – long, very long compared with the others. Do also consider the previous conduct of AAPL at the lower lines of the first and second double arcs. It’s always the same: That stock is exhausting…
We all know that the markets depend a lot on AAPL, and well, a turn from a major target may become very, very severe here. If AAPL drags along to more than 500 during the next 2-3 weeks or even over 510 we’d have the confirmation that the markets shall find their respective tops in February. After being reached the major target the AAPL share holders will have to cover now.
The loyal GUNNER24 readers and traders have been in since October 2010 at narrowly above 300$, and it doesn’t matter if AAPL adds 10 or 20$ yet. The Friday closing price "happens" to be located exactly underneath the lower line of the 3rd double arc. This is evidence that the market may turn now at any time. The stock knows where its resistances are positioned…
The best re-entry is at the rally Gann Angle that during the expected correction would have to be fallen below narrowly before the 500$ should be headed for, being broken upwards in the further course. The next major target of AAPL is the 5th double arc in the monthly setup – that one is located at about 700$ for 2017 and 760$ for the end of 2014 if the ascend wants to go on following the determining rally Gann Angle.
3. In the weekly time frame of the S&P 500 the highs of last week were at 1354.32.
Premarket the 1355.50 magnet we had expected was reached nearly to a T on Thursday. The market will be in its 20th week of the upswing next week being close to the Fibonacci number 21 in week counting that frequently marks a significant top. If next week produces a higher high than last week the market will be likely to exhaust to maybe 1395 until the end of February. If the market proves to have turned at the Thursday top it will be supposed to correct at least to 1300, the important support Gann Angle, turning upwards from there and heading for the 1385 until April.
1,2,3,,5,8,13,21,34,55,89 – that is how the Fibonacci series numbers read. On Thursday not only an important weekly magnet in the S&P 500 was reached, but also the 89th day of the upswing was marked.
Merely reaching this important Fib number is good for a significant turn. The support Gann Angle forced the market again to bounce back on Friday. A daily close below this support Gann Angle would make the horizontal supports at 1310 or 1296, respectively become the correction target (together with the weekly support Gann Angle at about 1300). The correction is supposed to proceed well-ordered, temporally backed by the support diagonal. From there the market is expected to rebound on daily basis.
I consider as to be conspicuous the fact that the upper line of the 2nd double arc wasn’t reached precisely, but maybe the market will have to reach it on Monday at 1352 or on Tuesday at 1350 in order to start the "more severe" decline. But here again is true: a daily close above 1355.50 and the trend will accelerate more. According to the GUNNER24 Rules we’ll buy a significant break of the 2nd double arc – no matter when that happens – with target 1385 or 1400, respectively.
Please pay attention top left in the setup the intersection point of two squares market with the big X. That’s where we may apply a GUNNER24 Counter Setup that gives us another reference to the course of the coming days:
We draw the counter setup down to the right until it overlaps the original setup exactly. Now you see immediately that the market is newly near the important counter double arc support:
We make the original up setup disappear. Only the counter setup remains visible. The reactions of the market at the support double arc are clearly visible. From my point of view the market has only got two possibilities: Either it acts as it did during the last test of the support double arc reaching the arc on Monday or Tuesday and following upwards by its last exhaustion move – that would mean some other higher daily highs because it has to follow upwards from its support. Or… the market acts as it did during the first test of the support double arc: The double arc would have to give up its support in time and price unable to go on backing it, so it would be newly quoted below. Today I estimate the latter course has a probability of a 70%.
But crucial will be the conduct of Monday and Tuesday!
Be prepared!
Eduard Altmann