Reckon on a correction in the upwards trend that brings new lows

As prognosticated in the GUNNER24 Forecasts Issue 05/02/2010 in May the US stock markets began their correction of the upwards trend. However, the maximum down target of 1120 we predicted in the S&P 500 was fallen short by far. At least, all the newsletter subscribers and all the members were on the right side – the short one to be precise – raking in considerable profits. After the 05/06 crash, in the GUNNER24 Forecasts 05/09/2010 we announced a new test of those 05/06 lows. That test has been taking place or it took place, respectively.

In this issue, as usual at the end of a month I'd like to offer a more extensive forward look at the expected price movements in June 2010.

In the final analysis we confirm our assessment of 05/02/2010 that we are in a stage of correction or sideways move lasting several months which should go on until the summer ending in July 2010 at the latest. Then the established upwards trend in the US equity markets should be resumed.

In the upper 3 Candle GUNNER24 Up Setup of the NASDAQ-100 Continuous Contract we recognize that by the May candle the market entered into a new Gann Angle corridor (highlighted in grey). May tested intensely the 3rd double arc as well as the green dotted square line from above. But it seems to close above it. So, at first we should work on the assumption of a successful test of both important supports marks. Caution! There will be long sessions of futures trading from Sunday night (6PM EST) to Monday morning (1130AM EST) and then reopening at 6PM on Monday. As it uses to do frequently in the 5th passed square, accordingly the correction should continue at least to the 6th passed square. That means closing prices at the primary 2*1 Gann Angle or a single or multiple test of it are to be expected.

In May, the Dow Jones closed only just below the chart anchored Gann Angle thus releasing a negative sign. June will open below the so far determining Gann Angle causing the probability of a test of the first double arc. A test until the primary 2*1 Gann Angle will be obvious if the green support diagonal on weekly basis is fallen short of. A possible June rally is limited to 10460!!

The S&P 500 is entering into a new Gann Angle corridor as well as the Dow Jones. Just as in the case of Dow Jones the green dotted support diagonal seems to offer at least an average support. But the price is sitting exactly upon it not having been rebounded from it for the last trading days. That is not really a good sign for the monthly consideration. Here again within the next months a test of the 2*1 Gann Angle seems to be likely.   

The weekly 7 Candle Elliptical GUNNER24 Up Setup makes clear how narrowly the markets are parking on their supports:

At the week closing the price is presenting itself pressed between the primary Gann Angle and the red dotted square diagonal coming from above. For the first time, next week allows the break of the primary Gann Angle (4th test). We will take up short term long positions at a day closing over 1103 with target 1140. At a day closing of under 1067 we will take up short term short positions on daily basis with target 1010.

Conclusion: For June 2010, day trading is announced since from next week as well a limited countertrend rally (more likely) as an immediate continuation of prices slipping through are possible and allowed. Long term weekly or monthly positions respectively are not to be taken up because as well the upwards as the downwards potentials seem to be rather limited. 

Gold keeps on performing the parabolic way – target 1320

Gold continues relying on its parabolic schedule (read here where we deduce that from...) following the upper line of the 2nd double arc. By the last week low and gaining almost 40 points last week the parabolic schedule was confirmed again. As early as next week some new all time highs could occur, if the upper Gann Angle visible in the GUNNER24 Setup is broken at 1229. But it is supposed not to be broken on daily basis immediately since it presented resistance twice already. For everybody who came late, the obviously to be expected week low at 1198 is offering a – maybe last – promising entry opportunity. The high of the exhaustion move is expected to happen in the week of 06/21 to 06/25/2010 at 1320.

EUR/USD – Monthly 5 Candle GUNNER24 Down Setup:

For the last time, we examined the pair at the beginning of May (05/09/2010) assuming then a possible short term countertrend rally. But on weekly basis no entry signal (reversal candle) arose. And for the end of the merry month a double sell signal is in the air.

If the pair remains on this level for the last two trading days (under 1.2280) a very strong sell signal would result which would activate the first sell target of 1.0925. If so, in one go the May candle would have broken both the blue arc and the lower line of the first square (supporting line). 

Things become interesting if the pair closes between 1.23 and 1.2360. In that case the possibility of a fake low trade (rule 19.2) would arise. Just to recall again: Fake lows (or fake highs) normally occur between the 2nd and the 3rd time lines. The aim is to shake off suddenly the majority of the market participants who are actually positioned into the right direction (short in case of the EUR/USD) in order to re-adopt the course of the down trend again later on thus shaking off again the market participants because newly they will be caught on the wrong foot. The entry for the possible fake low trade should be provided by a weekly reversal candle. Read on page no. 37 of the Complete GUNNER24 Trading and Forecasting Course how to trade this possible fake low the right way.

Be prepared!

Eduard Altmann