In commodities, the shorts got squeezed on Friday. US$ cratered, and the stock markets started the next stage of their actual daily upswing that is expected to lead them up to the most important resistances in the course of next week from where they are supposed to turn down again after a short topping process.

For several weeks the S&P 500 index we consider has been growing within the realm of the Gann supports and resistances it’s given, towards its next monthly up target…


…that is going to be at 1374 for July 2012. On 06/17 I worked out the allowed top for June at 1364. Two days later, at 1363.46 which was the absolute June top the market turned down. Furthermore in the 06/17 issue I made clear that the investors would have to expect a 3-4 week rally that is supposed to top between the beginning and the middle of July in the surroundings of the important confluence area at 1374-1372. At this important area the magnet of the 2*1 Gann Angle that is currently dominating in the monthly chart, meets the actually most important weekly resistance magnet that passes at 1372:


Above again, for brushing up you see the derivation of the important weekly resistance magnet (also presented on 06/17).

In June, at the top the S&P 500 tested for the first time its most important resistance magnet from below being supposed to do so again in July. Now, here’s the monthly 3 Candle GUNNER24 Setup with the final June close:


Everything is working within the framework of the important Gann magnets. For as many as two years, almost perfectly the setup has been depicting all the important turns at the important Gann magnets. At the second June trading day, the test of the important horizontal support at 1266 that arises from the intersection point of the upper line of the 2nd double arc and the beginning of the setup was perfect.

That’s from where the actual upswing started that topped on 06/19. With the June close at 1362.16 merely optically we can make out that the market is parking almost to a T at the 2*1 resistance Gann Angle correspondingly being supposed to head for it in July as well – it keeps on having a strong magnet function. Not before this magnet is touched again the market will be allowed to rebound from it… For July this important monthly resistance magnet is going to be at 1374. A brief overshooting of the 1374 on daily basis seems possible, and it’s allowed. The 2*1 Gann Angle meets the lower line of the 3rd at 1386. Thus the very strongest June magnet is there! Two important monthly magnets meet there at one price. And we always have to reckon with a significant turn in such a case.

To work out the top we always have to consult the actual daily setup. Therewith we’re able to do the fine-tuning, as it were setting the determining monthly magnets into a relation with the daily forecast.

With the analysis of last week the market had only two possibilities left to get to the 1374.


It chose orange. It retracted again down to1309 and 1310, that’s where on Monday and Tuesday the daily lows were lying. Then it had to open upwards. Since it closed above the first double arc on Friday, our long-entry was triggered:


With the final break of the first double arc the 2nd double arc is activated as a buy target. It’s a fact. Technically the market should be in a positive mood during the whole coming week (the Independence Day week is mostly positive caused by the season). So there’s a large probability that the lower line of the second will be headed for as early as within the next four days. From the point of view of the cycles Thursday after the Wednesday holiday offers itself for a first significant top. So it will be July 5th.

Now, as early as on Monday, after reaching the 1367, at the resistance Gann Angle that started from the last important low of October 4, 2011 the market might be pressed down being targeted from there the lower line of the 2nd – orange arrows.

I mean, only if the market closes above the resistance Gann Angle on Monday – speaking of about 1370 and up - the exhaustion up to the monthly resistance at 1389 will be possible on Thursday/Friday – blue arrows. We’ll cover our long-position in case of the first daily close above the lower line of the 2nd double arc. As well as always, a safe short signal won’t be given before we see how the topping process proceeds.

Is gold out of woods? Not yet!

Whereas with the developments of last week, for the entire commodity sector became apparent that with the May lows possibly even the year-lows 2012 were made (CCI – Continuous Commodity Index) in the field of the precious metals certainly not all that glistens is gold.

It’s understood, with the outstanding price advantages of Friday for the time being the gold and silver bugs remain at the helm again – at least in the short term. Above all, if we consider silver in a context with crude oil the short squeezes we could see in both markets on Friday might have been the first indications that also those two important commodities produced their final lows of the whole correction on Thursday.



…we gold and silver bugs cannot and must not become bullish before the elliptical resistance represented by the blue bow in the setup above is clearly overcome on daily basis, i.e. before it is broken upwards on daily closing base.

Above I simply combined the absolute daily tops of the days 16, 23 and 25 with the elliptical technique. Um, we see that the influence of this resistance won’t be completed before the end of July!

Thus – considered theoretically – during the whole month gold may rebound downwards from the elliptical resistance again and again. Not before that, the time will allow – always considered merely theoretically – a significant rise.

All in all we can also analyze that since the low where the setup starts no real initial impulse according to the GUNNER24 Rules can be counted out. It took four days from the absolute low to the first significant high. The absolute top of the initial impulse occurred on day # 16. Then we saw further tops on the days # 23 and 25 and important lows on the days # 6, 11 and 32. Not any of those tops or important lows matched exactly the 3,5,8,13,21,34. Everything was around it somehow. It’s correct all the same to anchor the setup there, at the currently valid final May low. That proves the performance of the price at the important Gann Angles! Gold joins the angles.

All things considered I think that the entire first initial impulse since the May lows is not supported by the mass of all the market participants! The whole impulse is unclean, and that involves some threats, especially the threat that the market will fall short of the May lows again!  


Everything is possible now. The probabilities for certain breakout situations are recorded in this chart. For next week, too, I consider the success of a significant break out of the elliptical resistance as pretty unlikely. And it will be above all taking into consideration the stock markets that might brutally fall again from Thursday. Gold and silver are technically expected to follow the stocks! The only possible exception would be if last Friday really a mighty new up impulse started. But I rather don’t suppose so because short squeezes very seldom ring in significant changes in trend.

Also the existing daily downtrend line is sketched in deep red. Well, technically we should have to reckon with this: In 3-4 days, at about 1615-1612$, where the elliptical resistance meets the daily downtrend line the next big battle will be carried out. If gold closes above 1627 one day of next week it will probably be out of the woods, because in that case we would have the confirmation that last Friday in deed a new initial impulse started that we could count out very well consecutively.

Though, if gold is soon rejected by its elliptical resistance and the daily downtrend line again, we’ll have the 30% probability of lower lows, and maybe only from there a clean, clearly countable initial up impulse can start!


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Be prepared!

Eduard Altmann

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