US markets are facing their tight last rally

 

Well then, next week the break upwards is going to succeed. For as many as 3 weeks the Dow Jones as well as the S&P 500 has been tinkering about some more or less tighten consolidations below their respective swing highs. Such a comportment as a consolidation at the highs, combined with the relatively long duration of the current consolidation (therewith the overbought conditions on daily base were worked off back gradually) promises an imminent trend-proof up-leg that is most likely to produce another all-time high for the Dow Jones.

 

For the S&P 500, at the end of this last up-leg will be the final top of the first half-year 2014. This is supposed to be marked by mid- to end of April 2014. Then the correction will start being expected to last till July-August 2014. The main driver of this bull market, the NASDAQ-100 is likely to have topped out as early as on 03/06/2014 however, at the 3738.32 index points that will have been reached then. The reason for that is mainly to be found in the extremely negative performance of the Google stock. Read more on that at the very end of today’s issue:

 

 

The currently valid daily low/high up setup of the S&P 500 I presented to you last Sunday already.


By this the market is oriented regarding support, resistances respective signals and targets. Compared with last week nothing really important has happened in the end. The consolidation beneath the Blue Arc Resistance is grinding on. However it’s most remarkable how resistant to a deeper decline the S&P 500 (and also the Dow Jones) is. After all, the Tech leader NASDAQ-100 had to concede a weekly loss of about –2.25%...


The S&P 500 by contrast is indicating that it is going to take the Blue Arc Resistance upwards soon. By the so far 8 tests of the Blue Arc – red arrows – the resistance function of the Blue Arc is macerated more and more. Some of the tests were extremely promising because they penetrated very deeply into the resistance. But the Blue Arc held because in none of the tests a daily close above the Blue Arc was permitted. The corresponding highs of the test days were sold off again and again. Furthermore the Blue Arc hasn’t developed so far any considerable down-energy sufficient to finally break the daily support line – green dotted uptrend line. Thus the consolidation at the highs turns out most humble, hence pro bullish.


The first daily close above the Blue Arc will activate the next higher target in the daily low/high up setup above. It’s a matter of the first square-line resistance at 1894 index points. The exact moment it will be reached also depends on the question when the Blue Arc will finally be taken upwards. If the break out succeeds till next Wednesday already, the first square-line resistance and the 1894 will be supposed to be attained by 04/14 at the latest. If the first square-line resistance is worked off till then, there will be a high probability that till about April 21 the lower line of the first double arc resistance will have to be reached as well. That would be the 1908 till April 21 as the final top for the first half year of 2014.


If the index keeps roaming about for 3-5 more days below the Blue Arc, the final April top at 1894 will be likely to be brought in.

 

As the presidency cycle has been following its ideal-typical pattern nearly perfectly since Obama’s re-election, here’s again the course for the current midterm year:

 

 

...the final break of the Blue Arc being the starting signal for the April rally should be shot so to speak till April 2 = next Wednesday at the latest!!

 

The NASDAQ-100 is most likely to have topped out this technically being in its extended correction that is supposed to bottom out in late summer between 3080 and 3030:

 

 

The March 2014 bull-market high is exactly at an identifiable Gann Magnet. The dominating monthly Resistance Angle and the important monthly resistance horizontal get together in March at 3735. Since the March candle will end in red, in addition being most likely to close below the main target of this bull, the 4th double arc, we must stress that this Gann Magnet is showing considerable resistance function and resistance energy.


Like always after a monthly main target is attained we may expect a change in trend. This one is not confirmed officially by the weak March closing. Not before April respectively May 2014 end below the March closing an official sell-candle will arise that would confirm the change in trend officially. In this case the combination of the 3rd double arc and the 2*1 Rally Gann Angle will be the strongest magnet = downmagnet thus being supposed to be reached respectively worked off in the course of the correction. If April or May close below the March closing we’ll also go short with target 3080-3030. Target achievement is likely to happen till August 2014.


If there is a nail in the coffin that co-responds that co-answers for and anticipates the expected change in trend in the US stock markets it will be Google. A hefty sell signal is delivered by the giant with the March close. Facebook and Twitter truly don’t look any better... The Wall Street is beginning to retire from the speculative growth stocks. When the speculative money leaves the growth stocks, the traffic lights are always dark yellow!

 

On 02/02/2014 I cautioned you of this development. Google, monthly 13 candle up setup

 

 

 

For GOOG it’s compellingly necessary to take now a several month break in the uptrend. In GUNNER24 Forecasts of 02/02/2014 I stated the grounds why GOOG shows the tendency to pause at the important double arc resistances in the monthly 13 candle up or thoroughly needs up to 6-7 months to take finally the important double arc resistances in the monthly dime frame. With the current March close a reversal candle arises. Since this reversal candle appears at a monthly double arc resistance, the temporary change in trend is confirmed. A thoroughly tight/hefty correction – for GOOG in the historical consideration - in price and time is to be expected now:

 

 

In the coming months, till summer end 2014, at least the confirmation of the 1000$ mark will have to be taken into account. This one is situated closely below the first important GUNNER24 Support Horizontal that springs out of the intersection point of the upper line of the 2nd double arc with the beginning of the setup. According to Gann, for stock markets and stocks it is always important to test back or to confirm the decimal powers, i.e. the 10. 100, 1,000, 10,000 because since such a back testing no further substantial rise in future is possible. The same principle is valid for open gaps. Gaps use to exert a strong magnetic effect to the price. Thereby it is actually possible that still in 2014 the altogether comprising 88$ opening gap that was opened from 10/17/2013 to 10/18/2013 at 888$ will have to be closed. No rosy outlooks for the broader market are there if GOOG happens to have to go down by another 20%!


Above in the monthly 13 Candle GUNNER24 Up Setup inter alia I recorded the important GUNNER24 Horizontal at 1129$. If GOOG doesn’t succeed in finishing March 2014 above the 1129$ mark a double sell candle on monthly base would arise, a most powerful sell-signal that rather indicates to the 888$ gap to be closed within this correction already.

 

But with today I’m working on the assumption that GOOG will finish March above the 1129$ horizontal. In that case the 1129$ horizontal would exert monthly support function thus letting participate the stock in the next 2-3 week rally. Then GOOG is most likely to head for the lower line of the 3rd again. From this resistance GOOG is technically supposed to rebound heftily. At the lower line of the 3rd = 1192$ for April 2014 there is the best, because most riskless short-entry for the 1000$ being the first downtarget for the due correction. It will take a monthly close above 1203$ for the current monthly sell signal to be denied!


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Be prepared!

 

Eduard Altmann