75% Chance the Lows are in for the Year
Description: Today the DOW rallied about 369 points. At around 3 the DOW was up only 70 points, erasing the 300 points of gains earlier in the day, however in the last hour the DOW rallied 300 points and the S&P rallied 40 handles. In the last 2 days the DOW has rallied close to 1000 points from the low of 15370. If the DOW gets up to the 16700-17000 range I would look to sell. If you had bought stocks earlier like Starbucks (SBUX), Home Depot (HD) or other big cap names, I see them starting to run into some overhead resistance on the weekly charts. I have a sell signal on the DOW, S&P, and NASDAQ 100. Any rally now should meet a stone wall on the weekly charts. This is the same type of pattern I saw in oil in early May. If the markets do rally I would sell. There is a chance the DOW will make one more low and there is a gap below around the 15700 level, however I believe there is a 75% chance the DOW has hit its lows for the year. Right now I am betting that the DOW has made its low for the year. I would be looking to sell on any rally if you bought in the last couple of days. If we get that pullback between now and sometime in September I would be looking to buy. I do still think there is a great chance of a rally in the 4th quarter towards the end of the year.
Gold is getting oversold on the daily charts. I am expecting one more push back up in gold which would lead to the one more pullback in the markets. The stochastics on the weekly on gold are turning up and on the daily charts they are pointing down. This is a divergence in which the bigger timeframe typically wins out, so I’m expecting one more pushup
Oil today was significantly oversold and got into the mid-38 range . We were up about 4.5 dollars on oil. I don’t think oil is out of woods yet. If oil gets up to 46,48, 49 range it will run into significant overhead resistance on the daily charts. Oil will probably trade in a range of 38-48 in the next month or so. As of now I don’t see oil getting above 50.