The S&P 500 continues to churn near its highs in the 1690-1700 range. Although the chracter of the market changed dramatically after the July 19 top date, marking an end to the 2013 upturn, the big downturn has not yet shown itself. We bonked against the highs for almost a month after July 19, and the dowturn to the 1630 area was quickly reversed.
I know this is furstrating behavior, but the big drop usually comes out of nowhere after a period of churning. There are plenty of news events coming that could spark the drop – the Fed, Syria, the debt limit, Summers’ appointment as the next Fed Chairman, an emerging market currency crisis and so on. I still expect some recovery starting in October into early November, but from then into mid-December and then right through 2014, the outlook is bleak.
We could see a bit more rally early next week to re-energize the short-term, 150-minute chart, but the S&P is in a very vulnerable position to any negative news.
Gold went to the $1,317 level I identified, and then staged a false breakdown to $1,304 intraday, before bouncing back into the close on Friday. False breakdowns re-energize the fractal diemsnion rapidly, as they suck in the last of the wrong-way money. This looks like the July low when gold plunged below $1,225 and hit the $1,180 target before snapping back in a major rally. A run to $1,350, the 38.2% retracement of this last drop, should be next. Once we get over $1,350, I think there will be a direct run to my $1,440 near-term target.Print This Post