SPX, Gold and USD update

SPX

I am not sure about a return to the highs but we should get a decent oversold bounce. Perhaps the bounce will translate into one more leg up to 1160-1170 SPX, but it's entirely probable that we will top off at 1090-1100 on the SPX. I will let go of longs at around 1090.

USD

Edited at 4:30 p.m.. Change in outlook.

USD chart: http://tinyurl.com/2bltafk

I see a move to 82 being possible. In fact, that is my 1 month target, and is what I believe may bring the equity indices back up. ST, there should be a bounce or resistance fairly close to the 50 or 55 DMA, but that is still 50-100 pips away.

The devaluation of the dollar is the only thing that will bring up the U.S. indices.

I think that there is a 50% chance that the U.S. Indices will top off soon and fall to 910-950 SP500 (and in the mid 8000s in the Dow). The only thing I see that makes this unlikely is that every one and their mother is looking for this. When everyone expects something to happen (here I mean the completion of the H&S in the U.S. indices) it rarely happens. Even if the H&S is to complete, it is possible that it will violate to the upside the right shoulder, so as to run the stops on the shorts. Maybe it will climb to 1145-50? This would mean a move down to 82 in the USD.

EDITED 4:15 p.m.: The other probability is that the 50 DMA proves to be the springboard for new highs in the USD. The 50 and 200 DMA are indicating a LT bull market in the USD. This would mean a top around 1090-1100 on the SPX and 10300 on the Dow.

Gold

I am expecting 1325. GLD itself is the best way to long this. GDX and SLV are not great vehicles right now, IMHO.

Conclusions:

The ES fell roughly 68 points from 1129.5. It's been following fib ratios on this recent move. It could go up 32 (1094.5), 50 (1112.5), 68 (1129.5), 76 (1137.5) or 100 (1162.5) percent of the fall. Right now, I have little idea about how high this bounce will go, hence I would not deploy long-term funds. I am quite sure that we will get a bounce and if I had long-term funds in the market, I would be out at 1090 SPX, 1300 Gold.

Short-term

If my projections are correct, we should gap up on the equity indices on Monday, gap down on the USD, half fill the gap and then go to 1090-1100 ES before resistance, 84.5 or so on the USD, and 1.2460 - 1.250 or so on the EURUSD. There may be a short pause at those levels.

I plan to stay long the EURUSD until just short of 1.26 where I revaluate my thesis, based upon the reaction to 1.26.

Friday

Bounce on Monday? Today is Friday + new moon. I don't see any bottoming action yet. We may form a higher low today (higher than 1045 SPX). Perhaps in the 1056-1060 range? I am still long from 1072, but may adjust (sell 1075 buy 1060).

Look at TLT. The daily chart looks over-extended with declining RSI; however, the weekly chart suggests a bull flag with a target of 110. This would accord with a target of 950 for the SPX. We are either bottoming and going to rise, or we are going to crash to 950. Overall I'm really not sure, and I may get out of my longs.

Update

Weird goings on.

1. Bearish death cross on the BVSP.

2. BSE looks like it could be about ready to top and drop hard. Lower RSI on the daily charts. Very close to all time high. Struggling here.

3. Copper, however, is stronger than it was at the May lows. This indicates some at least ST strength to come. However, there is a death cross forming in the Copper chart.

4. CRB is similar to BVSP. Death cross formed a while back. Now higher and hitting resistance at a falling 50 DMA. Bad news. Trouble in China?

5. Gold looks strong, but daily MACD is not looking strong.

6. PC ratio is oversold - daily and 5 DMA indicating possible ST bottom.

7. GLD:SPX ratio strong and indicating further strength.

8. Dow the most bullish of the indices. Not surprising. Strength now will come from the large caps.

9. Emerging markets to SPX looks very toppy. Suggests that SPX may be about to bottom or emerging markets may be about to top.

10. NDX daily could be bullish. Higher RSI low possible; MACD looks very constructive; 200 MA support very close below. However WEEKLY NDX is QUITE bearish. Looks ready to fall apart.

11. $NYA just formed a DEATH CROSS.

12. NYA 50R still has positive divergence.

13. Tomorrow night/Saturday is full moon.

14. NYHL still has positive divergence with May lows.

15. NYMO negative but not oversold.

16. NYA total volume super low over the past few days; indicating a TOP?? Summertime?

17. NYUD bottoming. RUT closed below the 200 DMA. Not close to a death cross. RUT not close to resistance, though. Long way to fall before May lows.

18. Friggin Shanghai looks constructive! Daily MACD is constructive! Daily RSI looking good.

19. TICK indicating lower lows to come in the short-term (tomorrow).

20. TNX breaking out below very important support?? MACD constructive. Daily RSI positive divergence.

21. Transports could be ST bottoming. Daily TRIN indicating bottom may be close. 5 DMA is quite oversold.

22. Like TNX, TYX looks constructive.

23. USD daily MACD looks very bearish, but ST bounce may be close. Rising 50 DMA is CLOSE!

24. FXI just hit the 200 (from below) and reversed. Also has a death cross.

25. GOOG has a death cross. Small bounce may be in order within a day or so. Bottom of a range. Then 420 target?

Conclusion - unsure. ST bounce to 1090 then drop to 950?

Outlook

Very weird goings on. Bonds are double bottoming? EURUSD is rising sharply as equity markets bottom? EURO might be about to take off.

1. Long-term (1 year+) bull market

2. Medium-term (next 1 year) bear market

3. Short-term (next 1 month) bullish

Indicators

5 DMA TRIN is oversold

Bonds (TNX) is at double bottom on daily charts with positive RSI divergence.

5 DMA of TRAN, DOW, NDX giving sell signal.

Rest of the market looks quite bearish, longer-term.

Trades

EURUSD is bullish. going to 1.26 in next 2-4 days. I am trying to go long.

AAPL - I may try to go long tomorrow, for a swing trade.

Outlook

1. RUT is at double resistance -- falling trend line (or parallel channel) and horizontal trendline.

2. 5 MA of all indices is bullish.

3. Thursday and Friday ending short squeeze has pushed indices up. EURO just got a boost as well.

4. Dollar is at or close to support.

5. RUT:SPX is bullish; indicating further strength to come, after possible pullback Monday-Tuesday.

6. SPX at top of channel as well.

7. 20 EMA of daily CCI on SPX (one of my favorite ST indicators) is bullish.

8. Shanghai appears to have bottomed for the short-term and so has Brazil.

9. TICK both intraday and daily are ST bullish.

10. Bonds (TNX and TYX)) indicate some ST bottoming action. Daily MACD in TYX is particularly constructive.

11. Daily VIX is bearish on a 5 MA chart. Buy signal.

12. 5 MA TRIN is overbought on SPX and the NDX. Indicating pullback is imminent.

Conclusion: Very short-term pull back then up to 1140 $SPX at least. Buy 1070 SPX. Start putting together long-term short list.

EUR-USD: 1.2150 - 1.199 - 1.2600

Will try to buy EURO at 1.199.

Today

ES Range: 1066 - 1090. Gonna try to buy swing buys today. IWM, SPY August calls?

Euro - will try to swing buy in the 1.19 - 1.20 range.

AAPL Update

Weak today. Will try to sell around 246 and buy again around 238.

UPDATE: Wow. Was I wrong. Just goes to show I can't predict strength later in the day from weakness in the morning.

Bought AAPL October Calls at 242.7

May be too early, but that's okay. This is a swing trade.

TNX and TYX

Bond rates show positive divergence in daily RSI. Daily MACD is also constructive. We may not see 1010 on the ES. We may be close to a bottom -- maybe 1030. Time to start buying August/September calls.

Anonymous Forecast on Another Blog

No opinion on this yet. Just putting it out there, mostly for myself to look at and think about.

http://whitemagicanditsexposure.blogspot.com/2010/06/beauty-contest.html#comments

The DX should drop 10 cents into Aug 10 2010. The target has been 95 and this from Oct 2009 when my call for the low was 72/74 and it made a low in Nov 2009 at 74.85 or so.

The only thing that changed was the pattern. It was suppose to be at 78/79 cents by April 16 latest end of April 2010 from the move up to 80/82 area.....then from 78/79 move to 95/96 by June 2011 and earliest Jan 2011.

So it must retrace soon a good 10 cents with Gold going to 1380, silver to 21.75 ( new highs), ES to 1240-1307, CAD to 1.02-1.05 all by Aug 10 2010.

I expect gold to fall from 1380 to $850-750 by June 2011 earliest could be Jan 2011 and silver to $10-8 from new highs of $21.75. $10-8 also by Jan-June 2011.

Coffee, wheat, beans, corn should make good retracements into Jan-July 2011 time frame with Coffee making new highs in 275-316 range. OJ should be down to 60-62 cents by Dec 2010 and then pop up within 3-4 months to 120-140 area by March 2011.

Euro, BP, SF, AUD should have good retraces till Aug 10 as long as DX ( us index) follows the pattern and breaks down soon into Aug 2010.

Finally, once the dx makes the 95/96 area it will proceed to crash into a final low at 41 by end of 2012/early 2013. It will test this low area 3 times in total into 2014 and then proceed to move to 113/122 and even up to 165 area or past it come 2019.

Gold will maket a new high of $2,800 with silver up to $120-150. Silver will outshine gold from 2011-2014.

Expecting 1010 on SPX in June

Negative divergence in lots of places.

Possibly 1055 - 1075 - 1010.

I would be out of long-term long equity holdings.

Correction: Expecting 1010-1035 intermediate bottom. Still bullish 1-3 months out. Bearish long-term (1-3 years). Bullish longer-term (3 years +).