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Due to space limitations, this article by Fortucast's Barry Rosen provides the author's outlook for only a few markets. Sign up here to get in-depth daily coverage of 13 financial markets with Fortucast's Daily Financial Report. S&P 500
(7/21) S & P futures made a new high to 956, negating the chances that the rally from 865 is an "x" wave. If the market does not fall much into a low on Wednesday and holds 931 or 926, there is a very small chance for a slight new high to 966 but that may be down to 20% very shortly. There does appear to be a secondary high from a bounce on Friday, July 24 to early Monday, July 27. We are now not seeing too much time for a rally into July 31 even though while 401k money may stream in August 3. The market should be under pressure into August 5 or even August 10. If the S & P is going to have any August rally, it would appear to be from August 10-14 and possibly with a secondary high into
August 21. We sense this market is strongly lower into Sept. 17-21 before an October rally starts into Oct. 15.
Our 120-year model is suggesting that mid-July was the secondary high for the year and that lower prices are due probably into Sept. 17-21 then a rally into Oct. 16 and then another lower into Nov. 1. We are estimating a fall into Sept. 17 toward the 770 region.
New lows on crude into late July should correlate with the stock market taking out 860 rather quickly. That low, however, which is also due on the CRB, is very important and would be followed by a retracement high into late August or early September before a final push down into Sept. 17-21 would develop on the CRB.
The good news is that we should get a retracement of the 2007-2008 low into June 2010 toward at least 1030 and possibly 1150 in the more bullish case. The bad news is that we are estimating that by Dec. 2010 the market will make new lows, possibly towards 600. From there we should do a 3-wave sequence up into Feb. 2012 that will probably fail in the 920 region and then the larger collapse will begin. At most the market would retest the 2010 high at 1150. We do see a minor inflationary period from March 2010-June 2010 that may spook the FED to start raising rates and by that time it will have to happen. Great Britain had declared to the public that they would not raise rates until June
2010.
This may then lead to more loosening and the double dip crisis into Dec. 2010. How the economy will come out of that crisis is unclear. Past cycle analogues suggest that the stock market could recover and retest the May 2010 highs into Feb. 2012 before a massive meltdown happens in 2013 with maybe 2012 sideways to lower.
LONGER-TERM: The underlying assumption of our long-term projection is the bear market that began at the 2007 high did not end at the March 2009 low. That means it should continue into at least 2015 and even 2017. The prospects for either hyper-inflation or default loom (maybe both) and suggest that the S & P may go substantially lower into 2013, where we estimate a target around 333. We are entering uncharted territory and the cycle analogue that we are looking at involves the Panic of 1903, when 600 railroad stocks went bankrupt and the market crashed big time. That year's crash was worse than the Great Depression's collapse in 1929. |
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CRUDE OIL
MONTHLY CHART TREND: Lower to 25.00 into Dec. 2010.
WEEKLY CHART TREND: Higher to 8800 into June 2010.
DAILY CHART TREND: Lower to 60-61 into August 5.
LONGER-TERM PATTERNS: We think that the inflation high that ended on June 15, 2008 will stick for a while and that a deflation low will eventually take crude to about $25.00 into Dec. 2010. The more intermediate picture is more complicated but it looks like the June 2010 high may only realistically be $88.00 rather than the $120.00 level that we have discussed. There are also a number of wild card factors operating. Firstly, war cycles will increase dramatically from Oct. 2009-May 2010. If the H1N1 flu pandemic hits really hard, it will start earlier deflation in which case the March 2010 secondary low may be much lower. Thirdly, we have to wonder if there will be enough of a recovery
to price crude much beyond $80.00 a barrel and whether signs of a recovery can create a massive move up in the first half of 2010. There appear to be more chances for this market to go up than to go down but a fall from Oct. 15, 2009 until late November could be nasty and it may not be done until Jan. 15, 2010. Still, it does appear a strong rally from Sept. 17-Oct. 15 could be $20-24. It could come from $54-55 into the Sept. 17 low first.
SHORT-TERM PATTERNS: Crude topped out on June 29 and then has done a larger correction than we have expected of about $15.00. I think that June 29 low will not hold. We are seeing a pullback to 60-61 into August 5 and then a rally to 70.00 into the week of August 17. The August 5 buy will be important and then a major sale will come Aug. 26-Sept. 17--and that could go down to 54.50-55.00 and set up another buy for a move to 75.00 into October 15.
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GOLD
DAILY CHART TREND: Topping toward 967-975 and then retracing into August 5 and then higher into August 17 and maybe August 26.
WEEKLY CHART TREND: Higher to 1120 into June 2010.
MONTHLY CHART TREND: Lower into Dec. 2010 and then higher to 2400-3000 into 2012-13.
SHORT-TERM: We think that gold will stall around 967-975 max. and then head lower into August 5. There may be a secondary high into July 27-28 or a new high if the market cannot rally much July 22-23. That may be the best set-up buy for the seasonal upward thrust into August 26 but cycle lows really dominate into Sept 17 so we really may not have a major buy until then.
This fall, the cycle that led to gold spurting up with crude from the middle of June to the middle of July is repeating and should be felt for a set up buy into Sept. 17. Last time gold rallied about $100 during that time frame but we are not sure how low this market will go into Sept. 17 to set up that rally. We are still open to seeing new highs on crude to 7550-8000 in August and that might push gold up to 1030 into the August time window. We do see the market mostly lower from the week of August 17 into Sept. 17 before we get another sharp rally from Sept. 17 into Oct. 15. Still, a larger collapse is likely between Oct. 14 into January 15 in three waves.
BIG PICTURE: Gold has been a tough market to play and everyone is expecting record numbers but they may have to wait a while. The best upward play for gold will be from Jan. 2010-June 2010 shorter-term and then a position trade should be done around Dec. 2010 with a hold into 2013. We might get 1120 or higher but we need to see a lot more data to measure that target. Moreover, a major deflation thrust hits June-Dec. 2010 and gold could even go down to 750 then if crude collapses to new lows. Gold bugs really have to wait until 2011 for a major buy and may not find instant gratification until 2012-13 when we should hit 2400 to 3000. Our biggest concern is a potential H1N1 Flu pandemic.
We are not clear whether it will lead to major buying out of fear or major selling on earlier than expected deflation.
Those waiting for the hyper gold cycles will have to wait probably into Feb. 2011-Dec. 2013. We think the dollar will become worthless or near worthless into 2012-3 and that gold will become king again. Prices project 2400-3000.
MAJOR DATES: July 27; August 5 (low), August 26 (high), Sept. 17 (low), Oct. 9-15 (surge high), Nov. 24 (low) and Dec. 21 (high), and Jan. 15 (major low).
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About the Author
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For the past 21 years, Barry Rosen
has been in the business of advising clients on market timing using modern adaptations to certain ancient cycles. His company Fortucast Market Timing Inc. publishes daily and intraday reports on over 20 futures markets, and mutual fund indices/ETFs using Gann, Elliott wave and five cyclical models. Barry predicted the July 15, 2008 low on the S & P to the day, hitting the price within .75 ticks -- and in fact has been forecasting a major break in the stock market of about 33% since January. Timer Digest ranked the Fortucast Alternative Investment Newsletter 6th in long-term timers over the years and 5th for Top Ten Timers between March 2007 and March 2008.
Mr. Rosen is registered with the NFA and the CFTC as a Commodity Trading Advisor (CTA). Fortucast uses proprietary cyclical timing models to filter out false indicators. His opinions on the markets are his own and do not necessarily represent the view of FutureSource. For more information about Mr. Rosen or his company, please visit his company's website: www.fortucast.com.
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