A Stone's Throw Away from the Next Price Octave

Stan Harley |

New All-Time Highs: S&P 500, New York Composite, DJIA

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The Bull Market Express rolls on. Friday saw the S&P 500, the New York Composite, and Dow Jones Industrials all close at a new all time high. The NASDAQ Composite, while not at a new high yet, is on the verge of tagging the all-important 5,000 price octave. Shortly thereafter, I look for this index to push into new high ground as well. Throughout this bull market, I have noted that the S&P has traded in a series of parallel 1 X 1 channels. The latest push higher has tagged the upper pattern boundary of the 1 X 1 depicted on my chart in cyan blue. But I don’t look for any stall-out here. The next major price octave at 2,125.00 is just a stone’s throw away and, while we didn’t hit that level today, I suspect we will early this week. From that point, I would expect some back-and-fill from which a new, parallel 1 X 1 channel will then take form.

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The New York Composite Index ($NYA) is now breaking out above the upper pattern boundary of a “symmetrical triangle.” The next area of resistance for this index is likely to occur in the vicinity of the 11,250 price octave.

Today, the Dow Industrials pushed above their late December high into fresh, new-high ground. Although the next price octave above 17,500 occurs at 18,125, I don’t look for much – if any – resistance at that level. We are already above it. More important is the structural pattern defined by the upward-sloping 1 X 1 channel depicted on my chart.  In the coming days I look for the Dow to push up to tag that channel boundary line and then “walk-up” that 1 X 1 angle as it has in the past. The subsequent more important octave is at 18,750 and could be more-formidable resistance. The next tradable high I have identified for the March 12 time period.

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Treasury Bonds / Yield

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The weekly TYX chart above shows the sharp rebound off the recent low at 2.23. Price on the TYX chart is likely to advance back to the downtrending 20 week moving average, undergo some back-and-fill, then push higher over the intermediate term.

 Precious Metals

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I am looking for about another week of additional downward-to-sideways chop before we get some kind of attempt at a snap-back to the 1,250 level – a major price octave for the gold market. Once that occurs we may have a decent re-entry point on the short side. I still have that strategy under study, but for now I continue to advise a sidelined position (NEUTRAL).  

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Each month, Stan Harley publishes TheHarley Market Letter, a newsletter that provides advanced technical analysis of stocks, bonds, and precious metals. This is the latest update to the Harley Market Letter for February. Want to learn more from acclaimed market analyst Stan Harley? Visit his site and subscribe to the full Harley Market Letter. 

 

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