Next NASDAQ-100 buy signal fired

Up, up and up again. This uptrend won’t top before May. The current uptrend started in August 2011. The market – NQ-100 - has risen by 720 points or a 35% over the past eight months. By the monthle close above the resistance of the first double arc in the actual monthly 8 Candle GUNNER24 Up, the leading NASDAQ-100 newly fired a monthly buy signal:

The last monthly buy signal was produced by this index in January. By a so-called double buy candle the resistance of the blue arc and the upper line of the first square was overcome in one go. Double buy candles are very mighty signals which often drive the market into undreamt-of heights. By the March close that was lying visibly over the first double arc, now the market is going to head for the next important resistance, the 2nd double arc in the setup above with a probability of more than a 70%. Newly at the end of the quarter we bought a tranche with target 2917. SL is a monthly close below the March 2012 candle.

Now the NASDAQ-100 is indicating that some momentum was forfeited in spite of the actual buy signal. Pulling up a market by the end of a quarter frequently leads to a certain weakness in the first two to three weeks of the new quarter. Pretty positively, now it is going to struggle for 2-3 weeks to overcome the horizontal resistance at 2778. In any case a correction on daily basis will get to its end at the important Gann Magnet in the 2677-2664 area. It’s at the intersection of the lower line of the first and the rally Gann Angle where there’s the best – because risk-free – entry into longs before the last rally up to the 2917 will follow.

The monthly 2917 target is mainly deduced from this weekly setup:

Starting from the low of the week around August 18 the first initial impulse was formed that lasted five weeks. Then, in the middle of November, week # 15, by touching the 1*1 Gann Angle the actual rally started that produced its latest buy signal clearly breaking significantly the 2nd double arc. At this break we went long with target 2760, as announced here.

Last week at the first day close above 2760 we covered this weekly position at 2778, with a 5.19% of profit. The brutal force of the actual rally is demonstrated by the fact that the price target was reached before the time. Meanwhile the rally has been lasting 34 weeks altogether pointing thus to the fact that last week a significant top on weekly basis was made. 34 is a Fibonacci figure. And at the Fibonacci figures or close to them frequently a significant turn happens.

Linking these experiences with the analysis out of the monthly setup above – actually that at 2778 there is a powerful monthly resistance, hard to overcome – by an 80-90% we can work on the assumption that since reaching the actual 2794 year-high the index has flown into a correction that is supposed to lead now initially to the first important weekly support at 2729 (center of the just passed square) and in case of a daily close below 2729 down to the combined weekly and monthly support at 2655. Then, from April 14-21 the NASDAQ is expected to turn up strongly, subsequently attacking the 3rd double arc, then closing and overshooting before the monthly and weekly targets at 2917 shall be reached by the middle of May.

But if the market ignores the Fibonacci count, as early as next week it will head for the lower line of the 3rd in the weekly candle up. The natural target of this rally is lying there after all. The lower line of the 3rd will be at 2821 next week. That would be the 35^th week, anyhow close enough to the 34 in order to correct then down to the 2nd double arc at 2655.

Whereas the S&P 500 and the NASDAQ-100 newly reached some small higher highs the Dow Jones is limping behind concerning new year-highs – it’s a divergence which may also be pointing to a correction in the S&P 500 and the NQ-100 that might have begun in the middle of last week:

We analyzed the Dow intensely in the last issue inter alia suggesting that – starting from 13080 at the beginning of last trading week – it would have to head for 13166 again, subsequently turning down in order to reach the 1*1 Gann Angle support in the setup above. By and large the plan didn’t fail. Instead of 13166 it was 13264, and on Thursday only 15 points were lacking to the exact contact with the daily 1*1 support.

Two things turned out with the price course of last week: A) By the repeated daily closings within the 3rd double arc the breakout of the 3rd is being prepared. That’s to say no matter how low and how long the correction on daily basis may go and last we’ll have to reckon with a significant break out of the 3rd double arc. And that’s what we’ll buy with target 14000 (monthly main target!).

B) So far the upwards trend in the Dow Jones is absolutely intact also on daily basis because the only important requisites – higher daily lows – keep lasting. A correction down to the possible important monthly support – you may read up here how this support was calculated – won’t be triggered off before there’s a daily close BELOW the 1*1 Gann Angle!  

Important monthly gold and silver supports and resistances

The US equity markets give a lot of pleasure because owing to their solid and safe trends they bring good money whereas trading around with gold and silver isn’t great fun actually. Currently their chart-technical state is to be considered as neutral at best. For as long as a month both metals have been consolidating their sparkling ascents of January and February 2012. Two months of rally and one month of correction. Technically the final lows of this one-month correction were brought in as long as almost two weeks ago, and the metals should have revved up a little more since.

The reason for this theory of the final March lows is the prevailing seasonality that shows a periodic significant low by the middle of March and the next significant high of the year by the middle of May in the bull market 2001-2011. Normally in the middle of May the absolute top of the first half-year is produced before the summer doldrums begin.

The reason for the sluggish and enervating soil formation is arguably the March expiry deadline… In the end now we’ll have to wait whether both metals will take the same course as they did after the last important expiry day. I mean, after the December 2011 expiry deadline the last important rally started from the December 2011 lows leading up to the February 28 year-high at 1795.10.

Silver in the monthly setup:

In the GUNNER24 System silver is certainly the weaker of both precious metals considering its position in the setup. March produced a reversal candle = negative, and the closing price within the 2nd double arc is showing the general silver weakness. It’s positive that the support Gann Angle, starting from the 2008 lows stopped the decline again. In terms of the seasonality, based on the March lows a rebound should have begun that is confronted with so many monthly resistance marks however so it will be very hard in April to reach the important 36.28 resistance diagonal just approximately.

A powerful resistance is the upper line of the just passed square at 33.38. It would take a weekly close above 33.38 to facilitate the 33.85! And it’s very questionable whether the 33.85 on closing price basis is really taken significantly in April. At present, the resistance diagonal is the most important monthly resistance after all. It was responsible for the monthly October and November 2011 tops finally retracting the market at the February 2012 close as well.

The most important support is the 2008 support Gann Angle that is going to be headed for at 32.18 as early as tomorrow. It will be interesting to observe from there whether the expected spring rally might start beginning with the first April trading day…

Current monthly 8 Candle GUNNER24 Up Setup - Gold:

Gold keeps on long in spite of the new red candle. Even though March closed narrowly beneath the 2008 Gann Angle support again this important support wasn’t broken significantly. The comportment of the March candle is showing some similarity with the course at the blue rectangles where the market closed a little bit below the angle. Adding and considering the green rectangle we’ll see that a strong up-month was to be observed after the three closing prices.

Newly for April 2012 I expect a strong up-month, and as analyzed above already the next significant top is supposed to be made in the middle of May. The line in the sand for the new attack to the strongest monthly resistance at 1763 will be a weekly close above 1723. 1763 is the maximum we can expect in April. Target for our longs continues being the lower line of the 4th double arc at 1845. SL keeps being a monthly close below 1656.

The way you, too, may take optimally advantage of the most bullish phase of the first half-year in the precious metal market, with intraday and swing trading methods is shown to you by the GUNNER24 Gold Trader.

Be prepared!

Eduard Altmann