My early July update forecast a coming bottom in stocks based on a top in oil and a bottom in financials. These major reversals materialized shortly thereafter and have characterized the stock market ever since. As we descended to a support at 1256 in the S&P, our view that penetration below this number would be a short-lived selling climax and, once having regained that level as support, have looked to higher target numbers for the trade while remaining more or less agnostic on whether a permanent bottom was in or if we were buying a bear market rally. In the Dow, we expected nothing less than a retest of the previous support at 11750, which, as the chart below illustrates, was finally reached this past week.
The point of being unbiased is to make high probability trades and, in our estimation, the kissback to 11750 was such a move. The real decision about whether this is a sustainable rally will be made from these levels. In the S&P our immediate target was 1306, more than 100 points off the July low. Higher numbers are reserved for members only.
But over the past week, trading in stocks has been sloppy and looks as if the market is genuinely undecided about the next direction. If, like us, you were long for this rally off the lows, holding back for more clarity from the market instead of placing bets based on personal bias makes a lot of sense. With that strategy in mind, the trade against oil and the euro is looking overdone at least in the short term and the equity versus commodities trade next week bears some careful monitoring.
Because it hasn’t been all stocks. Obviously commodities have been a major part of the headlines recently, and TTC often managed to find better and easier trades in these markets than in the major stock indices. Take crude oil, for example. After riding short positions down to $123, we used the chart below to determine whether to re-enter on the short side. As you can see, this one chart alone has produced almost ten points in crude since the start of the month.
Gold has also attracted a lot of attention lately for its precipitous declines, but members know we’ve been leaning on the bearish side of precious metals for months and have had a target between $750-800 since spring. In June, we said gold could be the short of the year, so it wasn’t exactly surprising to see the declines that have raised eyebrows lately. Our gold forum has become quite active and uses a variety of techniques to analyze this moving market. As this market has made dramatic overnight moves, members have discussed and traded gold and silver in our real time chatroom at all hours, proving our international membership never sleeps! The chart below from this past Wednesday shows a triangle pattern forming, which suggested a bottom was not yet in place, even after several big drops. As you probably know, gold finally did move below $800 for the first time since last year in the overnight Thursday/Friday session. For more on precious metals, read Joe’s "Precious Points" update.
Soybeans haven’t exactly been stealing headlines, but that doesn’t matter since it’s been trending nicely and providing profitable trades. The chart below from last weekend shows typical TTC analysis as we monitor a market and look for confirmation of our expectations.
As you can see, the chart ends with the proposition that a long trade in soybeans looked favorable with a high risk/reward profile. If you aren’t aware, soybeans even traded lock limit up since then, handsomely rewarding members who used this chart and took the easy trade. The chart below shows soybeans as of Thursday.
So, as you can see, TTC has been quite busy trading since we closed our doors to new retail membership and paused the regular free weekly updates. But coming soon, and for a limited time only, TTC will reopen for new members while space is available. Beginning Saturday August 30 until September 8, or until available spaces are filled, TTC will be accepting new members.
Because we take the quality of our service very seriously, we strictly limit membership and work to develop members’ trading skills. Having noticed an improvement in our current membership, most of which are professional, institutional traders, we will accept a limited number of new retail members for one week only. TTC does not issue trade signals because we teach you how to trade. We don’t spoon feed you because we teach you how to take care of yourself. So, whether you’re a novice trader who wants to get better, or a more experienced pro that’s wants to share what they’ve learned and go to an even higher level in multiple markets and timeframes, TTC is the place for you. Stay tuned for further updates with information on how to join.
Have a profitable and safe week trading, and remember: "Unbiased Elliott Wave works!"
This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual. Check with your licensed financial advisor or broker prior to taking any action.