Thursday, 13 June 2013

S&P 500 futures down from New York close, will last week's low hold?

The S&P 500 futures have been down sharply today, so will last week's low hold? Nobody knows, least of all me. That said, when markets get especially emotional, I find Elliott Wave a useful tool for working out what scenarios may be unfolding. Today's social media feeds qualified as especially emotional during the Asian session, lots of bearish jubilation. So it's time to look at the short term EW count.

On the hourly chart I can count three waves down from the late June high down to last week's low, big A-B-C. Three waves identifies that move as corrective, implying it will be followed by a rally to above the May high. Then from last week's low I can five waves up small 1-2-3-4-5 identifying that the very short term trend has turned back up. From the wave 5 high we see three waves down small A-B-C that looks like a completed correction. If the count is correct, then the market should rally now from above last week's low, and big wave 3 up lies directly ahead.


Maybe last week's low will hold, maybe it won't. Maybe the S&P has made a big top, maybe it hasn't. The chart that keeps me open to the market moving higher is the weekly, showing a megaphone topping pattern that would look nicer if the market rallied to the upper trend line.


How would we know that the S&P has made a big top? At the least, it would need to move back below the 2007 high. No sign of that yet. Monthly chart illustrates.




AUD/USD holds within long term support zone

Weekly chart shows the AUD/USD holding within a long term support zone. Which way will it break from the zone? Nobody knows, but if it rallies through the top of the zone, 97 or so, there is going to a heck of a lot of short covering.


EUR/USD must turn lower nowish if Head and Shoulders top is forming

The EUR/USD must turn lower nowish if (if!) a Head and Shoulders top is forming. Daily chart first.


Weekly chart shows the EUR/USD testing a trend line resistance zone.




GBP/USD still wrestling with trend channel resistance on daily chart


Since 1999, buying Gold mid year and holding til year end has been profitable in most years

Gold has made a significant low in either May, June, July or August in 11 of the past 14 full years, with 9 of those lows occurring in a June or July. Those 14 full years take us back to 1999. By significant low, I mean a low that held for the remainder of the year (at least). Most of those significant lows preceded a big rise through to the end of the year in question. The number of mid-year significant lows rises to 12 out of 14 if you include  2005, and there is a fair argument for doing so, as will be illustrated below.

The following sequence of charts shows a weekly candlestick chart for each calendar year since 1999, to illustrate the significant lows in each year.

1999 bottomed the week of August 23, only 30c under the week of July 19 bottom. That August low marked the beginning of the current Gold bull market:



2000 bottomed the week of October 23:



2001 showed a significant bottom in the week of July 30:



2002 showed a significant bottom the week of July 29:



2003 showed a significant bottom the week of July 7:



2004 bottomed in May and showed a significant bottom in the week of July 26:



2005 showed a significant bottom in July, ruined by the spike low in September. That spike low does not show up for all data providers, so I am not sure it truly happened, or what the full story was:



2006 showed a significant bottom the week of June 12:



2007 showed a significant bottom the week of June 25:



2008 bottomed in October:



2009 bottomed in January and showed a significant bottom in July:



2010 showed a significant bottom in July:



2011 showed a significant bottom in June:



2012 bottomed in May:


2013, what does the remainder hold? Nobody knows.