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 GUNNER24 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:

Comparing the first correction move after the all-time high (September 2011) with the correction move that started in October 2012 at the 4th double arc we make out some ABCDE patterns. There are dissimilar forms of the individual waves adjusting the ABCDE that is present since October 2012 to a Fibonacci relationship in a nearly ideal way in terms of price:

The ABCDE of the all-time high in 2011 corrected the price deepest at the low of the C. Subtracting low of C from top of A we’ll get 1923.70-1523.90=399.80.

We calculate the 2012/2013 ABCDE from the top of A = 1798.10 to the actual E wave low = 1554.3. It’s a range of 1798.10-1554.3= 243.80.

Dividing now 243.80 by 399.80 we’ll get 0.6098. That is almost ideally at the irrational number, the golden number, the Fibonacci number 0.618. That’s a very strong hint that the decline is over having been marked the final low of this decline by the 1554.3.

The actual attempt of a bottoming-out at the 1*2 Support Gann Angle reminds me a lot of the bottom we saw in May 2012 – very slow and feeble, sentiment at the end, hopelessly bearish indicators and so on.

The way the determinant resistance in the weekly time frame – the powerful 4th double arc – and the 1*2 Support Gann Angle are positioning and perpetuating for the next week is an indicator that the same symmetry and the same recuperation pattern in terms of price and time as in the May 2012 lows might – I repeat: might – develop. The ABCDE pattern symmetry might be followed by a further ABC symmetry, up to maximally 1755 until the beginning of June 2013, the most important monthly resistance. From there gold is supposed to decline very heftily again then.

The second test of the 1*2 Support Gann Angle at 1560.40 on Friday is likely to have finally a lasting effect after all for this picture. I.e. the rebound from the 1*2 should have to perpetuate, not only a 2 or 3 day small upmove to be sold-off severely afterwards again. A daily close above 1600 during the next 5-8 trading days will make it very, very possible that gold will join the ABC pattern price sketched above. A close above 1600 in gold should confirm that the stock market have had their fling being now in a short- or medium-term correction mode!

That was the thoroughly possible up-scenario that might be denied if a weekly close below the 1*2 Support Angle happens. The 1*2 Support Gann Angle rises every week by 3$. So the critical closing area for next week will be at 1663.40 (1600.40 + 3 = 1663.40)

Furthermore, the so far lowest weekly close since the all-time high is a really critical trigger mark. If a weekly close below 1566.80 happens gold will head for the 152x with a very high certainty. Those are pretty likely to break in the further course. 1470-1480 will be the next important Gann support in the monthly time frame!

In these whipsaw markets of the last weeks that might confuse any trader thus leading mercilessly to burning the trading account the professional signals have got their special importance. You get them in the GUNNER24 Gold Trader!

You best register with our GUNNER24 Gold Trader now. That’s where we oversee the optimal entries and exits for you. Especially in the difficult market situations where many factors have to be considered the Gold Trader is backed by the additional GUNNER24 Signals based on the combined 1, 4 and 8 hour setups to catch the optimum entries and exits.

Be prepared!

Eduard Altmann