A great job done by the bulls

Boldest possible was the exclamation mark set by the bulls last week – new uptrend highs in the NASDAQ-100 and the NASDAQ Composite Index. The Dow Jones and the S&P 500 are virtually crying out for new all-time highs. Gold, too, twitched up impressively, for the first time during several months generating a buy signal in the weekly chart that however has to be taken with a big pinch of salt!

But before I go closer into the actual countertrend moves (price and time targets) of gold and silver let’s have a more intense look at the S&P 500:

Last week I still analyzed that it would take two consecutive weekly closings above 1635 to confirm the final re-conquest of the important 1*1 Gann Angle. Well, I think now it’s clear that after this phenomenal uptrend week the final break of the 1*1 Gann Angle is unambiguously confirmed. The last week candle is a matter of a so-called trend candle, an uptrend candle. From the opening the market moves up ignoring a different direction and closing at the highs. The trading margin is high above average. The re-conquest of the 1*1 Gann Angle releases new up-energy being supposed to lead the market now to the next uptarget, the 4th double arc, pretty trouble-free. Uptargets till the first August week are now the 1702 = lower line of the 4th or the 1711 respectively, the next higher horizontal weekly resistance line.

Whether the natural resistance of the 4th double arc is leading to the expected summer correction – August to September – is still written in the stars. For the last important uptrend candle produced at the beginning of January 2013 triggered the all in all 21 weeks lasting rally till the so far all-time high. The uptrend candle of last week may be the starting point for a similar monster rally in terms of price and time!!

As things are looking at the moment the August/September correction can only turn out extremely measly, perhaps 1650-1630 or so. If July closes above 1680 index points – near the highs thus, GUNNER24 Forecasts of 07/07/2013 – we’d have an important clue that now we may even experience an "uptrend year". In such a case the market would go up from the first trading day of 2013 till the end of 2013 finishing the year near the year high. The beginning for this scenario is ultimately done. The year low 2013 was made on the first trading day of 2013 at 1426.19, exactly with the year opening.

On monthly base we’ll buy the S&P 500 in case of a July close above 1680, with target 1845, just as analyzed last week.

On daily base the S&P 500 is pretty overbought, so next week a test of the weekly 1*1 Gann Angle at 1648 might be due. We’d buy this test with target 1702:

The daily up setup by which the market orients itself most, can be caught best with the 13 day initial impulse that starts at the low of 02/26 ending at the high of 03/15.

Last Monday (07/08) the resistance of the 3rd double arc was overcome. The Monday close was at 1640.46. Thus, not only a daily buy-signal was generated but also the weekly 1*1 Gann Angle Resistance was overcome by the Monday close. New up-energy was released… in fact in the daily as well as in the weekly time frame.

Next target in the daily setup is now the 4th double arc. With more than a 75% of probability it will be reached in trend direction. It’s attracting the market magically. In this daily setup we can derive some important Gann marks that are also visible in the weekly 5 candle up setup. Ergo those marks are Gann Magnets. Gann Magnets attract the market magically. A) On the one hand there’s the 1648. That’s where next week the 1*1 will back in the weekly setup. The 1648 is situated at the most important daily support Gann Angle, actually for next Wednesday! B) The 1702 in the daily setup arises at the intersection point of the lower line of the 4th with the horizontal resistance of the just passed square.

Next week we’d only buy the possible reaching of the 1648 MIT (market if touched), daily position; no stop-loss; main target 1702. In case this long entry takes effect at any rate we’ll cover at 1702 MIT. A daily close above the 4th double arc in the daily 13 candle up above will produce the next daily buy signal with target 1745.

Are the 1648 going to be headed for till next Wednesday? The chances are good. As mentioned, the market is extremely overbought in the short term, so a little correction would be nearly necessary and healthy. In the daily 13 Candle GUNNER24 Up the actually most important daily resistance – the resistance angle – was already narrowly exceeded with the Friday close but not yet broken upwards finally. Merely theoretically this performance permits the 1702 to be reached swiftly in the course of next week!

Silver and gold partially with uncommonly strong buy signals

Please pardon my sarcasm. But gold really delivered an unusually powerful buy signal. I’ve avoided the effort of browsing exactly the last "that important buy signal". My sensed memory tells me it was months ago. Here again it’s supposed to be a matter of a fake as well as all the "few" short- and medium-term buy signals in 2013 were. The shorts are just untightening the rein a little bit, I think.

If it is really more than a countertrend move since the last important lows, technically silver should have to out-perform gold very clearly, especially now at the beginning of a sustainable possible change in trend! But it doesn’t. It’s bobbing up and down. No impulse move, no energy is to be seen. It’s tinkering again with a formation of continuing the trend. It seems to be an upwards sloping channel. These are unequivocal evidences that another test of the lows is very likely to happen, most probably followed by some new lower lows:

Last Thursday a first little buy signal succeeded on daily base. The Blue Arc Resistance was overcome on closing base. The first target of this countertrend is activated thus. It’s the first double arc at 20.56. A daily close above the first double arc activates the 2nd double arc at 21.20 as the main target of this swing. On Friday the Blue Arc tested back, and the red candle just narrowly above the Blue Arc is another indication how groggy and shaken silver is. Normally the final break of the Blue Arc should have had to lead to subsequent buys…

From the GUNNER24 Forecast point of view there are some other signs of weakness. On the one hand there’s the several time test of the 1*1. Certainly it’s positive that this one resists, but we can’t talk about really strong energy development. Then there was the first initial impulse. It lasted but two days. The really persistent new moves are expected to show initial impulses of let’s say 5-8 days of duration.

If the countertrend wants to last 13 days, at the first double arc and 20.56 it will finish before silver dives again. But the performance of gold (see the next chart…) also permits a 21 day lasting countertrend and reaching the 2nd double arc and the determining resistance line at 21.20. That’s where at the latest the shorties are expected to tighten the hangman knot tensely again.

Gold got through with the best week in all 2013. Yeah…, hard to believe: this fiddling around was the highest weekly gain in the whole year 2013!

In the weekly 13 candle up the week traded on the important time line I analyzed most extensively in the last issue. In the important time lines the resistances as well as the supports are pretty easy to overcome. Frequently they don’t play any part. For gold the weekly opening above the lower line of the 4th combined with the important time line constellation finally meant a lush weekly gain.

The weekly close above the 1274 horizontal resistance – now support – facilitates now a test of the 1344-1347 resistance Gann Angle. This one is moving for the next two weeks between 1344 and 1347. The strongest Gann Magnet, in this case the strongest resistance, will be at 1347 the week after next. There the resistance Gann Angle will meet the upper line of the 4th at 1347. What’s in store for gold then, well, some glances into the past are sufficient. A hefty decline is to be expected there! W.D. Gann: „When price meets time a change is imminent".

This decline is likely to last till the middle of August. We can expect that at least one of the still pending sell-off targets – 1172/1140/1122 – will have to be worked off during this coming sell-off wave.

It will take a weekly close above the upper line of the 4th to deny such an outcome!

We cannot only make out the strongest weekly resistance at 1347 but also an important resistance in the daily time frame – the lower line of the 2nd double arc at 1345:

Gold is showing a 3 day initial impulse from the lows. Thus gold is stronger than silver. On Thursday gold achieved a double buy candle on daily base. Within one day the Blue Arc as well as the upper line of the first square was broken upwards finally. On Friday gold tested back only the upper line of the first square. Thus, altogether gold is stronger than silver, therefore gold and silver are very likely to be in a countertrend bounce now.

First target for this countertrend hence is the first double arc in the daily time frame – 1302. Actually gold is in the 10th day of the countertrend, thus the first double arc is supposed to be reached at the 13th day of the countertrend at the latest = Wednesday. In the strong downtrends the counter moves only extend up to the first double arc before the main trend is resumed again.

But, since the weekly time frame permits the 1344-1347 until the week after next being effective as a resistance there in the daily setup also the 2nd double arc and if the actual countertrend performs in price EXACTLY the way the last important countertrend (purple arrows) did, I think that gold isn’t likely to achieve its countertrend high at 1344-1347 before it’s near to the 21st day of the countertrend.

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Eduard Altmann