New Highs Imminent
The chop shop environment I envisioned for the stock market put on a head of steam at last week’s FOMC announcement.
And it’s been higher ever since with the Dow Jones Industrials, S&P 500, New York Composite, and very likely the NASDAQ Composite on the verge of eeking out new, all-time highs.
In recent days I have slightly modified my view of the market geometry. Up until recently, I had thought February 25 marked the high point – the crest – in the latest 39.8 trading day cycle series. But now I’m more-inclined to believe that high is yet to come. Early next week, we should have both the Dow and the S&P bumping up against the upper pattern boundaries of their rising 1 X 1 channels. That contact has typically fostered resistance in the past. But for the S&P, we have that index approaching the 2,125 level – a major price octave and probable resistance. I’m inclined to believe we should see a push to new highs early next week with a stall-out by Tuesday or Wednesday. From that March 24 high (+/- a day or two), I look for a short – but sharp – selloff into the April 6 time period marking the next trading cycle low. From that “April 6 low,” I expect one final ramp-up into about May 13 to seal the deal on this bull market. But remain flexible…
Treasury Bonds / Yield
Since marking the latest 84.3 trading day cycle pivot, the TYX (yield on the 30 year bond) has pulled back to about mid-range of its most-recent low-high swing. I’d be surprised if we were to see the 30 year yield fall much further. I look for continued back-and-fill right in here, with a bounce near-term back to the 20 day moving average.
Gold prices have recoiled back from their most recent oversold condition to tag the 20 day moving average – still in a downtrend. I don’t see any meaningful advance until that important indicator of trend has flattened-out and turned back upward. That process will take some time. Accordingly, I would expect precious metals prices to back off from here in an attempt to find some stabilizing floor of support. I still would like to see 1,250 tagged one more time before re-issuing my BEARISH advisory on the precious metals.
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 March. 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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