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THE WEEKLY RE-LAY
--Stock Indices Fulfill Projections For Drop Into August 25-27 And Test Of 9,980/DJIAA
--Rebound Into Early-September Expected...
--Dollar Signaling Important Reversal; New Multi-Year Bear Market Could Begin Soon!!
--Bonds and Notes Surge Into August 25 Cycle Peak;
--1-2 Month Correction Possible...
--Gold and Silver On Verge Of Breakout Higher!!!
Beginning 08/28/10 Weekly Re-Lay...
System Trade(s) Update: Stock Indices declined into August 23-27th, when weekly and daily cycles portended an initial bottom. They could see a bounce but the overall expectation is still for a new, multi-month decline.
Bonds and Notes surged higher but set an initial peak along with geometric cycles. This reinforces the potential for an overall advance into late-November 2010. An intervening, 2-3 week correction is now likely.
The Dollar again rebounded but fell short of its intermediate upside target, showing some signs of developing weakness. The action of the coming week could go a long way in determining what to expect leading into November. The Yen has consolidated since reaching key upside targets during the convergence of monthly cycles.
Gold and Silver are in a volatile range of consolidation with Silver retesting a 2+-year range of resistance.
Soybeans, Corn and Wheat may have completed initial declines and could be poised for a retest of their highs.
Energy markets are rebounding but still expected to move lower into October.
STOCK INDICES: 08/28/10--1-4 Week Outlook--Stock Indices have added another level of validation to intermediate cycle highs--on August 2-13--while fulfilling the initial (2-4 week) downside objectives for this decline. The Indices all dropped to their respective monthly support levels (see above), the intra-month targets that were cited the past couple weeks.
At the same time, they fulfilled projections for a drop into--and a potential intermediate bottom during--the past week of August 23-27. That is when an 8-week low-low-(low) Cycle Progression and a 9-week high-high-(low) Cycle Progression converged.
By spiking back down on Friday, the Indices provided fulfillment to a daily Cycle Progression as well (although it was the opposite extreme of what was discussed as a possibility on 8/25).
The Indices perpetuated a 16 trading-day high-high-high-high-low Cycle Progression (highs on May 27, June 21, July 14 and August 5--each one divided by exactly 16 trading days--and then a low on Friday, August 27, 16 trading days later) and projected focus to September 21 (16 trading days from August 27) for a future low.
What is probably most important about the recent low (if it holds for a couple weeks or longer) is not what it fulfilled but rather what it corroborates and projects. A low on August 25/27 (depending on which Index is being observed) came 90 degrees after the May 25 low and 180 degrees from the February 25th low (intervening low between February 5 bottom and April 26 peak)...as well as 120 degrees from the April 26 peak.
This projects focus to November 22-26--90, 180, 210 and 270 degrees from these turning points. November 22-26 is also the 2nd of 2 weeks when the 14-15 week cycle comes back into play. It is also the 2-year anniversary of the November 2008 bottom (a bottom which was never violated in the NQ-100) and the next phase of a 21-week cycle. I will be discussing this in more detail in the September 2010 INSIIDE Track.
DJIA (Cash) Sep Mini ND-100 (NQU) Monthly Resistance 1156.0-1167.1 10,955-11,001 1963.0-1976.0 Monthly Support 1026.0-1041.0 9,980-10,043 1738.0-1761.0 Weekly Trend Down/Neutral (2) Down Down Weekly Resistance 1084.8-1098.6 10,334-10,461 1838.0-1884.0 Weekly Support 1038.0-1042.6 9,936-9,966 1705.0-1740.0 Daily Trend Down Down Down
Short-Term (1-5Day) Outlook--Stock Indices added validation to the recent peaks but the SPU was not able to give a weekly close below 1061.8. This is a critical level of confirmation, needed to validate the early-August peaks. The new intra-month trends (for September) could provide important affirmation. Currently, the Indices could rally into September 1 without turning their daily trends up. So a rebound peak could be seen in early-September.
Trading Strategy--No new system trade.
INTEREST RATES: 08/28/10--1-4 Week Outlook--Bonds and Notes remain on track for an overall advance into the end of 2010. They have the potential to set a major top--that could hold for many years--at that time.
The action of the past week--in particular, the timing of the recent high--is adding some advanced corroboration to this potential (by increasing the synergy of cycles at that time). That high--set on August 25--perpetuates an ongoing, 90-degree series of intermediate peaks...and projects a subsequent one for November 24/26-- 90 days/degrees in the future.
To repeat from last week:
"The ideal time for an intra-year peak would be in late-November or early-December...There is also a unique web of geometric cycles that align in late-November and which could be further corroborated by a peak in late-August (now).
Bonds and Notes trade in very consistent 90-degree (13-week/3-month), 180-degree (26-week/6-month) and 360-degree (52-week/12-month) movements. This is not a new discussion and has been reviewed in recent months, with regard to cycle lows (i.e. the July 12- 16 bottom came during a recurring, 13-14 week cycle).
However, there is a similar series of peaks that have occurred since the November 27, 2009 top. These occurred on February 26 and May 25...and another could be seen around August 25. If a peak is seen in this window of time (this past week or the coming week), it would add another geometric cycle projection (90 degrees from now) focused on late-November 2010.
As a result, I would expect this latest high to hold for several weeks. The first sign that this scenario is unfolding would be the daily trends turning down (which could occur as soon as August 31). This should be quickly followed by the intra-month trend--in September--turning down and the daily 21 MACs turning down.
The weekly trend pattern should help dictate when an intervening bottom is most likely. Currently, the week of September 13-17th is shaping up as a prime candidate. A 60-degree cycle is mildly corroborating.
Sep Bonds (USU) Dec Euro$ (EDZ) Sep 10-Yr Note (TYU) Monthly Resistance 130-26 to 131-14 99.69-99.73 125-01 to 125-12 Monthly Support 126-01 to 126-20 99.35-99.38 122-14 to 122-27 Weekly Trend Up Up Up Weekly Resistance 135-03 to 135-13 99.63-99.64 126-03 to 126-08 Weekly Support 131-27 to 132-06 99.47-99.49 123-28 to 124-09 Daily Trend Up/Neutral (1) Up/Neutral (2) Up/Neutral (1)
Short-Term (1-5Day) Outlook--Bonds and Notes have neutralized their daily uptrends and could turn these trends down on 8/31. Watch the weekly HLS levels (131-27/USU and 123-28/TYU) as initial downside targets.
Trading Strategy--No new system trade.
CURRENCIES: 08/28/10--1-4 Week Outlook--The Dollar Index has nearly fulfilled its initial upside target after rallying sharply since testing 3-6 month support (80.13-80.51/DX). It added another key level of positive corroboration--with the daily 21 MAC turning up on Monday--but failed to give the most important level of bullish confirmation.
The Dollar Index must reverse its weekly trend to up--with a weekly close above 83.43/ DXU-- in order to validate expectations for another advance into November 2010.
This is a critical level of confirmation that must take place soon. If it fails to occur, it would give initial signs that I am wrong...and that a decline--instead of a rally--could occur, leading into November. This possibility was also ushered in by the timing of this past week's high...If the Dollar fails to exceed its recent peak, it would leave an 11-week high-high-high cycle in its wake. A subsequent, 11-week decline (high-high-high-low Cycle Progression) would culminate on November 8-12.
The fact that the Dollar Index fell a little shy of its initial upside target reinforces this possibility (by showing some underlying weakness), as does the potential for a head-and-shoulders peak.
The Euro is the inverse and needs a weekly close below 1.2663/ECU to turn its weekly trend down and to confirm this scenario (for a drop into November 2010). This must take place--in the next 1-3 weeks--in order to prevent the Euro from mounting a new, multi-month advance.
The reason I discuss these possibilities now is due to the big-picture outlook (for new Dollar weakness from late-2010 into 2013) and to respond to subtle, potential early-warning signals that these markets are currently generating.
The Yen has fulfilled all of its upside objectives (spiking above 1.1790/JYU while fulfilling the potential for a surge into August 2010, when an 18-19-month low-low-low-low-high-(high) Cycle Progression matures) but needs a daily close below 1.1663/JYU to neutralize the daily uptrend and give the first sign that a top is taking hold.
Sep Dollar (DXU) Sep Yen (JYU) Sep Euro (ECU) Monthly Resistance 84.14-84.53 1.1792-1.1843 1.3502-1.3550 Monthly Support 79.09-79.68 1.1315-1.1378 1.2477-1.2602 Weekly Trend Down/Neutral (2) Up Up/Neutral (2) Weekly Resistance 83.44-83.83 1.1865-1.1904 1.2828-1.2876 Weekly Support 81.89-82.48 1.1565-1.1579 1.2587-1.2634 Daily Trend Up Up Down/Neutral (1)
Short-Term (1-5Day) Outlook--The Dollar Index and Euro are at a crossroads with the Euro just neutralizing its daily downtrend. The coming days could provide some early signs of what to expect in September-November. The Yen remains in an uptrend until a daily close below 1.1663/JYU.
Trading Strategy--No new system trade.
INFLATION MARKETS: 08/28/10--GC/SI--1-4 Week Outlook--Gold and Silver remain in a wide range of consolidation with the 2-4 week trends being up but the 1-3 month and 3-6 month trends being neutral.
Silver gave a conflicting weekly 2 Close Reversal higher (following last week's 2 Close Reversal lower)-- further clouding the near-term outlook while reinforcing that congestion is firmly in place. This was reinforced by Gold's failure to turn its weekly trend to up.
So, what about the bigger picture? Considering the price resistance that Silver just tested, it is a good time to step back and review it's 1-2 year trend...
Silver's recent surge allowed it to again test a range of resistance that has been holding since July 2008. This range-- from about 1935-1945/SI-- was tested in July 2008 (the secondary peak following the major peak of March 2008) and held.
In November 2009, Silver retested its July 2008 peak (and this range of resistance)...but could not give a weekly close above it.
In May 2010, Silver retested its November 2009 peak (and this range of resistance)...but could not give a weekly close above it.
In June 2010--and now in August 2010--Silver has again retested this powerful resistance...but has not (yet) given a weekly close above it.
In other words, this consolidation has been in force for quite a while.
By the same token, Silver has developed a level of contrasting support around 1730-1740/SI that was tested and held in May, June and July.
Conclusion: Silver has been in a volatile, $2.00/oz. range of trading since April 2010à and has maintained the same level of major resistance since July 2008.
This observation reinforces that the most critical support levels-- for these trends--remain at 1167.3-1172.0/GCZ and 1715-1750.0/SIU. Gold and Silver would need to give daily--and then weekly--closes below these levels in order to turn the 3-6 month trend down.
Platinum did decline into August 20/23-- when an intermediate bottom was likely--and reversed back up without giving a weekly close--below 1473.0/PLV. Combined with the intra-year trend (which maintains support at 1471/PL), this could be signaling the time for a new advance.
Copper reversed its daily trend to down and immediately entered a normal rebound. It maintains the potential for another peak in early-September but a much more important cycle comes into play in October...
This is when an 18-week low-low-(low) and an 18-20 week low-low-low-low-(low) Cycle Progression come into play. If Copper sets an intervening low at that time, it could be ready to enter a new, multi-month advance.
The CRB CCI Index remains below its early-2010 peak but is in a weekly uptrend that is providing underlying support.
The recent peak fulfilled a 7-month/30-31-week high-high-high-(high) Cycle Progression and argues for a larger-degree decline. However, this will only remain valid as long as the CRB does not give a weekly close above 504.71.
Dec Gold (GCZ) Sep Silver (SIU) Monthly Resistance 1228.0-1236.4 1871.0-1892.5 Monthly Support 1131.5-1139.4 1708.0-1730.0 Weekly Trend Down/Neutral (2) Up Weekly Resistance 1252.5-1255.0 1983.0-2006.0 Weekly Support 1216.2-1220.8 1799.0-1823.0 Daily Trend Up Up Nov Soybeans (SX) Oct Crude (CLV) Monthly Resistance 1051.0-1061.5 83.35-83.86 Monthly Support 931.0-949.0 73.05-74.43 Weekly Trend Up Down Weekly Resistance 1043.5-1057.0 77.51-78.29 Weekly Support 1001.0-1008.5 72.15-72.78 Daily Trend Down/Neutral (2) Down/Neutral (2)
Short-Term (1-5 day) Outlook--Gold and Silver are both in daily uptrends that should provide support into month-end. The new intra-month trends in September should help clarify the 2-4 week outlook.
Trading Strategy--No new system trade.
Soybeans, Corn and Wheat remain in 1-2 month uptrends, further validating the myriad of cycles that bottomed in early-June. They are consolidating near their highs, but are showing signs that they may have just set pullback lows. Corn has already rallied to a new high while Soybeans could do the same in the coming week.
Watch weekly 2nd Close Resistance--at 1044.0/SX--as the first important level.
Crude Oil, Unleaded Gas and Heating Oil did extend their declines into August 25--a 3-month/ 90-degree move from their respective May 25 lows. In the process, Crude spiked to its lowest level since May 25. This set the stage for an initial bottom, which was confirmed by the late-week rebound.
The overall outlook is still for a decline into October 12-22, when a 24-25 month Cycle Progression and a 21-22 week Cycle Progression come into play. The most important confirmation of this scenario would be a daily and weekly close below the May 25th low of 70.35/CLV.
Another level of corroboration could be seen if Crude sets at intervening peak at the mid-point (between the August 4 peak and the projected October 12-22 low)--on September 8-13.
Natural Gas has shown more intermediate weakness than originally expected and extended the latest decline beyond the ideal points in time (August 20th) and price (4.115/NGV).
As a result, it is likely to wait until next week--the 1-year/360-degree anniversary of its major bottom in 2009 (and the culmination of back-to-back, 1-month declines)--before setting a bottom.
Cotton has further validated a '5th' wave advance on the daily charts (5 waves since the June 7 low) but will not show any signs of a reversal lower until a daily close below 86.30/CTV.
On a larger-degree basis, Cotton has also confirmed the onset of a 5th wave advance on the weekly charts (5 waves since the November 2008 low) that is showing signs of culmination... The initial ('1') wave rally--off the November 2008 bottom--was 15.70 basis points. After a very lengthy and powerful '3' wave surge, it is natural to expect the '5' wave to be similar to the '1' wave--in magnitude and/or duration.
A similar 15.70 point rally--from the June 7 low of 73.60/CTV--projects a surge to about 89.30/CTV. Cotton just spiked above this level, fulfilling the minimum price objective.
On a cycle/timing basis, the '1' wave lasted 11 weeks. The '5' wave has just extended its duration into the 11th week from the June 7-11 bottom.
So, Cotton is fulfilling much of what should be expected--in both time and price--from a 5th and 5th of 5th wave advance. It could set a multi-month peak at any time.
Coffee remains in a powerful uptrend and spiked to new highs on August 23, completing moves/cycles of 30, 60, 90, 120 and 180 days/degrees from recent peaks and lows.
It quickly reversed lower--providing initial validation to these geometric cycles--but needs a daily close below 163.50/KCU to turn the daily trend to down.
Until this occurs, there is a good chance for a retest of the recent peak in Coffee.
Sugar has reinforced the development of a æ5thÆ wave advance (since the early-May low) and could see a continued rally into month-end. It is close to testing important resistance--the lows set 1 year ago (before a final surge into major cycles that peaked in February 2010) around 20.50/SB.
This is a crucial level of 'support turned into resistance' that should be monitored in the coming weeks.
Live Cattle remains on track for a spike above its continuous high (100.20/LC) in the coming weeks. This will remain the outlook until/ unless Cattle gives a daily close below 96.35/ LCV.
From a timing perspective, the outlook is still for an extension of this rally--into early-September--when an intermediate peak is most likely. If so, it would occur at the same time of year as 2 of the past 4 intermediate peaks (early-September 2008 and early-September 2009).
If this peak arrives in the coming week, it would also perpetuate a 6-week low-low-high-(high) Cycle Progression.
Narrowing it down even more, Cattle has set a 1-2 week peak every 14 days--since July 8. This sequence--of peaks on July 8, July 22, August 5 and August 19-- projects another peak on September 2.
So, the ideal scenario would be for Cattle to spike to a new high on September 2 and then reverse lower.
As each week passes, Cattle adds more validation to the bottom that was set during the June 7-18 cycle lows (when a 26-27 week low-low-low-low Cycle Progression again came into play). Consequently, it now projects focus forward to the next phase of this cycle--in late-December.
Lean Hogs are battling between their weekly trend (which still argues for a spike above 80.00/LHV) and their daily trend--which is more bearish. There is another factor that could be thrown into the mix in the coming week...
Lean Hogs now only need a spike below 73.20/LHV to begin to turn their weekly 21 MAC down. If this takes place, it would provide a much more negative bias toward the 3-6 month trend.
Lumber still needs a daily close above 223.40/LBU (222.40/LBX) to turn the intermediate trend positive and to project a new advance that could last into mid-October.
Cocoa dropped to new 12-month lows, reinforcing the potential for a larger-degree decline that should ultimately carry Cocoa down below 2500/CC and lower into September 7-10.
That is when a 19-week high-high-(low) Cycle Progression and a .618 retracement in time (of the October 2008-December 2009 advance) converge.
...End 08/28/10 Weekly Re-Lay
Beginning 09/01/10 Weekly Re-Lay Alert...
"Geometric Cycles Governing 3-4 Week Moves"
Stock Indices are one of many markets reversing right in synch with geometric daily cycles. After peaking on August 5-9--perpetuating their 14-15 week cycle--Stock Indices turned down and were projected to drop into August 23-27th, with the DJIA projected to test 9,980.
Stock Indices declined for almost 3 weeks and bottomed in perfect alignment with geometric cycles on August 25-27 (90 days/degrees from the May 25 low, 120 days/degrees from the April 26 peak and 180 days/degrees from the February 25 low). At the very least, this was expected to create a quick, 2-4 day rebound as part of a 1-2 week bottom.
Stock Indices pulled back to begin this week--testing and holding weekly support levels while remaining above last week's lows--and reversed higher. This reinforces the potential for a 1-2 week bottom, but now comes decision time...
The Indices could rally for another 1-2 days without turning their daily trends up. The same is true of their intra-month trends. So, another couple days of upside is likely. However, they would have to turn their daily trends up in order to signal anything larger than that. (The earliest the daily trends could turn up would be on Friday's close and the trigger points are not yet established, so this will be examined further over the weekend.)
Bonds and Notes were another pair of markets that turned along with geometric cycles. Each topped last week--during similar cycles on August 25-27--270 degrees from the November 27, 2009 peak, 180 degrees from the February 26 peak and 90 degrees from the May 25 peak.
They have twice neutralized their daily uptrends and need daily closes below 133-17/USU and 125-02/ TYU to turn these trends to down. If this occurs in the coming days--and if they can corroborate it by turning their new intra-month trends to down--Bonds and Notes could easily see a 2-4 week correction.
The Dollar Index neutralized its daily uptrend, giving another subtle sign that an intermediate top could be forming...and a multi-month decline beginning. At such a critical time--in a market that is expected to enter a new multi-year decline before the end of 2010--it is worth reiterating some factors that were discussed this past weekend...
1--The Dollar failed to reach its 2-4 week upside objective, showing mild signs of underlying weakness.
2--The weekly trend failed to turn up, after turning neutral (from down) multiple times.
3--The Dollar set a peak in line with an 11-week high-high-high cycle that could create a subsequent, 11-week decline (high-high-high-(low) Cycle Progression) into November 8-12.
The Euro is the opposite and has now given two neutral signals against its daily downtrend. It would take a daily close above 1.2856/ECU to turn the daily trend to up and to signal a 2-4 week bottom.
The Euro is currently testing its weekly resistance, increasing the need for a break above current levels in order to confirm a bottom.
The Yen remains in a strong uptrend until a daily close below 1.1641/JYU.
Gold and Silver remain in wide ranges of consolidation with Silver bumping up against a crucial range of resistance that has been in place for two years. Gold is testing weekly resistance, so both metals are at decisive points from which a brief pullback could be seen.
There are a couple important factors to keep in mind, with regard to the intermediate trends and outlooks in Precious Metals:
1--Gold needs a weekly close above 1239.5/ GCZ to turn its weekly trend to up. If this occurs on September 3rd, it would turn the 3-6 month trend and outlook back to the positive side.
2--Silver remains in a weekly uptrend.
3--Gold and Silver just gave weekly 2 Close Reversals higher, projecting an additional 1-3 weeks of upside (that could stretch into the next phase of their weekly cycles--that converge on September 13-24).
Combined with the decisive resistance that Silver is testing, these factors indicate that both Gold and Silver are at crucial crossroads when they could signal new waves higher.
Soybeans, Corn and Wheat are giving mixed signals--on a 2-4 week basis--but remain in 2-3 month uptrends. Soybeans need a daily close above 1029.0/ SX to turn their daily trend to up and to confirm a 2-4 week low.
They have pulled back to weekly support, leading into mid-week (after closing higher for the month)--but did so after spiking to a new inter-week high on Monday (which sets up the potential for a weekly 2 Close Reversal lower). The daily 21 MAC is also poised to turn lower. This sets up tomorrow as a decisive day for the intermediate trend.
Crude Oil, Unleaded Gas and Heating Oil are another set of markets that set lows in conjunction with geometric cycles last week. They dropped into August 25--a 3-month/90-degree move from their respective May 25 lows--and then reversed higher.
They are still expected to decline--on balance--into October 12-22, when a 24-25 month Cycle Progression and a 21-22 week Cycle Progression come into play. However, as discussed this past weekend, a rebound into September 8-13 is possible (and could corroborate the overall outlook).
Natural Gas remains weak and will not show any signs of bottoming until--at the very least--a daily close above 3.960/NGV. Until then, all trends remain down as Natural Gas approaches the 1-year/360-degree anniversary of its major bottom.
Cotton has fulfilled the primary upside objectives--in price and time--for its intermediate 5th wave advance...but will not show any signs of weakness until a daily close below 88.15/CTV.
Coffee--by remaining in a daily uptrend--is increasing its chances for at least one more spike high before an intermediate peak becomes likely.
If a new high is seen in September, it would perpetuate a 7-month low-low-low-(high) Cycle Progression and set the stage for a pullback into October 4-8.
Sugar is testing important resistance but will not signal a top until a daily close below 19.23/SBV.
Live Cattle remains capable of spiking above its continuous high of 100.20/LC...and setting a peak in early-September 2010. It has pulled back and held near-term gap support and will not show any signs of weakness until a daily close below 99.20/LCZ. It has the potential to stretch this rally into September 9/10.
Lean Hogs--based on their weekly trend pattern--are still arguing for a spike to new highs (above 76.15/LHZ) in the near future. The weekly 21 MAC remains up while the daily trend and daily 21 MAC are negative. So, the new intra-month trend should be the filter for what to expect in the coming weeks.
Lumber continues to build a base but needs a daily close above 223.40/LBU to signal that an intermediate uptrend is underway.
Cocoa remains on track for an overall drop into September 7-10thà and down to/below 2500/CC.
...End 09/01/10 Weekly Re-Lay Alert
September 1, 2010
Eric S. Hadik, Editor
INSIIDE Track Trading
P.O. Box 2252, Naperville, Illinois
Independence, MO 64052-0526