Sunday, March 27, 2011

GOLD and S&P

Although the reversal in Gold on Thursday was not a 'classic' bearish engulfing reversal the market action certainly had many of the characteristics of a significant reversal.
Here are the important price levels to monitor:
  • geometric fan lines from previous lows are at 1398-1410 and 1367 with the former level being the most significant.
  • 720 degrees (2 Gann square cycles) from the July 28th low at 1155.90 equals 1444--which is very close to the recent high.
  • 1382.60 low swing pivot is quite important--a break of that level would suggest lower prices in the near future.
There is evidence of momentum divergence with both the RSI and MACD.

The are several geometric cycles that line up for a potential trend change in the current time frame.
  • December 3 2009 high + 480 calendar days = March 28 2011
  • June 28 2010 high + 270 cd = March 25 2011
  • July 28 2010 low + 240 cd = March 25 2011
  • Dec 7 2010 high + 120 cd = April 6 2011
  • January 27 2011 low + 60 cd = March 28 2011.
Having such a large number of geometric harmonics falling on the March 25-28 time period is quite a powerful indication of a trend change.

SPX 500
The S&P stopped near the linear down trend line emanating from the Feb 18th high of 1344.07. The market declined 95.02 points into the March 16th low. If--repeat--if--the market were to decline again starting now--an approximate equal decline in amplitude--95 points--would bring the market down to the 200 day exponential moving average--which is a typical place for important bottoms to be made during bull market corrections.
There are several geometric cycles due in this time frame--hence the ENERGY DATE WINDOW--that could be the start of a resumption of the recent downtrend--especially of gold decides to tank!!!!!!

Bottom Line: Until the 1173.00 level is broken on the downside the BULL has control of the market and it is my belief that eventually the 1360-1365 level will be tested--likely in June of 2011. If the S&P tests the 1360-1365 level coincident with a Energy Date--especially from mid May to mid June--there may be a case to look for further evidence of a MAJOR top being made which will be followed by a significant--and VERY TRADABLE decline.

The 45 degree geometric fan line from the November 16th low of 1173 is at 1301 on Monday and is rising 1 point per calendar day.
The 45 degree geometric fan line from the Feb. 18th high is at 1306 on Monday and declining 1 point per calendar day.

If the 1301 level is broken lower prices can be expected short term.

1 comment:

Anonymous said...

OR (for Gold) it's the start of a big old C leg up ..
Nice call though ..