Domed House in the Dow

Above this post are three charts. The first two are daily bar charts of the Dow industrials on which I have labeled turning points of the minor and of the major domed house formations I have been following. You find my previous posts on this subject here. The top chart is a line chart of the number of issues traded on the New York Stock Exchange which advance in price along with the 20 day moving average of this number. I last commented on this indicator here.

Take a look at the top chart of the daily count of advancing issues and its 20 day moving average. The significant thing I see in this chart is that the 20 day moving average has reached its lowest level of the past 12 months. I exepect this moving average to start moving upward toward its overbought zone and during this upmove I think the Dow will make new highs.

If I am right about this then experience shows that the Dow will make its ultimate high about 2-4 months after the 20 day moving average makes its high. In particular, this would seem to rule out the projection of the Major Domed House you see in the second chart which calls for the top at point 23 on July 13.

I think the Minor Domed House interpretation you see in the first chart is the more likely outcome in view of the behavior of the advancing issues moving average. It calls for a top about 7 months and 10 days after point 14. This is Lindsay's standard time interval for the Domed House formation and it projects a top for November 8 of this year.

It is possible to stretch the Major Domed House so that point 23 comes near November 8 too. To do this one must erase the labels for point 21 you see in the chart. Counting forward 7 months and 10 days from point 20 in the Major formation brings us to October 24 as the projected point 23.

Tale of the Tape

LEADERS:


GOOG: Support is at 512. Next upside target is 552.

IBM: The 102 level is support and 112 is the next upside target.

GS: I think GS is about to move above 233 resistance and rally to 250. Support now is at 210.

CME: Support is at 525. I think the market will rally to 630 before the bull market ends.

MO: Support is at 68. Upside target is 75.


OF INTEREST:


BIDU: Has reached the 165 target. Support is at 136 and next upside target is 195.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at 112. Upside target is 135.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 134.

NYX: Support near 77 failed to hold. I now think NYX will make a low near 68 and then rally to 90 or so. I am abandoning my expectation for a new bull market high anytime this year.

NMX: I think the action in NMX bodes ill for crude oil prices and for the price of NMX itself. I think the recent high near 148 will hold and that the the 100 level will be seen later this year.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50, resistance above the market is at 61.

SHLD: If the 215 level is to be seen this year I think support now at 165 must hold.

KFT: Support is at 30. Next upside target is 39.

AMZN: Resistance is at 76. Support is at 65.

EBAY: Support is at 30.00. Market should reach 43 in a few months.

WMT: Headed for strong resistance at 55. Support is at 48.

Guesstimates on June 29, 8:50 am ET

Spiders - September S&P Futures: I think the low for the drop from the June 1 top in the S&P’s occurred Wednesday at 1492. Next upside targets are 1570 for the S&P’s and 155.50 for the Spiders. Support in the S&P’s is 1503 and in the Spiders is 149.00.

QQQQ: I think the Q’s are on the way to 48.70.

TLT - September Bonds: The bonds should hold support near 106-16 and then rally to its next upside target at 108-20. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should move to 86.50.

September 10 Year Notes: The notes should hold support near 105-00 and then rally to 106-16. I think the market has established an important low from which it will rally several weeks and at least 3 or 4 points.

Euro-US Dollar: This morning the market broke above resistance at 134.50 and so I conclude that it is heading back to its top at 136.80. I think that the market will eventually drop to 125 or lower before it goes as high as 138.

Dollar-Yen: Next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Support now is at 512. Next upside target is 552.

Guesstimates on June 28, 8:50 am ET

Spiders - September S&P Futures: I think the low for the drop from the June 1 top in the S&P’s occurred yesterday. Next upside targets are 1570 for the S&P’s and 155.50 for the Spiders.

QQQQ: I think the Q’s are on the way to 48.70.

TLT - September Bonds: The should hold support near 106-16 and then rally to its next upside target at 108-20. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should move to 86.50.

September 10 Year Notes: The notes should hold support near 105-00 and then rally to 106-16. I think the market has established an important low from which it will rally several weeks and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: Next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Support now is at 512. Next upside target is 552.

Advancing Issues

Here are daily line charts of the number of issues traded on the New York Stock Exchange that advance in price. The purple line on the first chart is the five day moving average of this number, the red line on the second is the ten day moving average, and the blue line on the third chart is the fifty day moving average. The first two charts show activity over the past 12 months while the top chart shows activity over the past 24 months. I last commented on this indicator here, here, and here.

Today the averages made new lows for the reaction from the June 1 top but both the 5 day and the 10 day moving average of the daily advances made higher lows relative to the lowest levels seen since the June 1 top. Moreover, the daily number of advancing issues shows a sequence of higher lows even as the S&P averages have moved lower during the past 10 days.

I regard this action as a definite bullish divergence and as confirmation that a substantial upmove lies ahead.

The last time I disucussed the 50 day moving average it was hanging about at levels which were relatively high and not close to the oversold levels which would mark the end of a substantial reaction and the start of an important rally. However, since that time this moving average has dropped close to the oversold line which marked last June's low.

I think this is the first clue that the upcoming rally may last longer than I have been expecting. Currently I am expecting a high in mid-July, but the 50 day moving average of the advancing issues number may be warning us that the next top will be delayed until this moving average can again approach overbought levels, an even that would normally take at least tow or three months to develop.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the S&P futures, the Spiders, and the QQQQ's. I last commented on these markets here.

Before floor trading opened this morning the S&P's traded as low as 1492, not quite reaching the 1490 target I had in mind. Since I am basically bullish on stocks here I am willing to bet that this morning's low marked the end of the drop from the June 1 high, but even if I am wrong I doubt that the S&P's will drop more than a couple of points below 1490.

At this juncture a move above 1520 would be very bullish because it would represent a rally above the high of the last reaction before the low.

The corresponding levels for the Spiders and the Q's are marked on the charts above.

In any case I think we are about to witness the start of a multi-week rally which will carry these markets to new bull market highs.

Guesstimates on June 27, 8:50 am ET

Spiders - September S&P Futures: I am now expecting a low in the S&Ps’ near 1490 and in the Spiders near 147.50. Next upside targets are 1570 for the S&P’s and 155.50 for the Spiders.

QQQQ: I think the Q’s will establish a low near 46.60 and then begin a rally to 48.70. have begun a move up to 48.70.

TLT - September Bonds: The market is headed for 107-20 and eventually higher than that. Support is at 105-18. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should hold support near 82.80 and then move to 86.50.

September 10 Year Notes: The notes are headed for 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: Next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Support now is at 512. Next upside target is 552.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P e-mini futures, the Spiders, and the QQQQ's. I last commented on these markets here.

The market has tried to rally several times from support near 1510 in the S&P's over the past two days, but each attempt was met by renewed selling. I now believe that we shall see new reaction lows in the S&P's around the 1490 level and in the Spiders near 147.50. The Q's should drop to 46.60 or so. Once those levels are reached I think the big rally I have been expecting will get underway.

Guesstimates on June 26, 8:50 am ET

Spiders - September S&P Futures: I think the S&Ps and the Spiders have started moves to their next upside targets which are 1570 for the S&P’s and 155.50 for the Spiders.

QQQQ: I think the Q’s have begun a move up to 48.70.

TLT - September Bonds: The market is headed for 107-20 and eventually higher than that. Support is at 105-18. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should hold support near 82.80 and then move to 86.50.

September 10 Year Notes: The notes are headed for 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: Next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Support now is at 512. Next upside target is 552.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P E-mini futures, the Spiders, the QQQQ's. The top chart above this post shows the daily count of the number of issues traded on the New York Stock Exchange which advance in price and the purple line on that chart is the five day moving average of that number. I last commented on the S&P's and Q's here and on the advancing issues indicator here.

I find two interesting bullish omens in the charts above. First of all the Q's are acting much better than the S&P's and are well above their June 7 low. Second the daily advancing issues numbers have made a sequence of steadily higher lows (thin black line) while the five day moving average is in the process of making a higher low at its oversold line.

I am willing to go out on a limb and say that the low I have been expecting is at hand. I think the Spiders and S&P will hold above the daytime low made on June 7 (visible on the charts). The next upswing should carry these markets to the upside targets you see on the charts above.

Guesstimates on June 25, 8:50 am ET

Spiders - September S&P Futures: Support in the Spiders is at 149.50 and in the S&P’s it is at 1510. From those levels I think both markets will start a move to new bull market highs. Upside target for the S&P’s is 1570, for the Spiders 155.50.

QQQQ: I think the Q’s will hold support at 47.10 and then move up to 48.70.

TLT - September Bonds: The market is headed for 107-20 and eventually higher than that. Support is at 105-18. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should hold support near 82.80 and then move to 86.50.

September 10 Year Notes: The notes are headed for 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P E-mini futures, the Spiders, and the QQQQ's. I last commented on these markets here.

The S&P's and Spiders broke the support levels from which they bounced yesterday. I am still betting that these two markets will make higher lows above the levels of the March 7 lows. My best guess now is that the futures will hold support near 1510 and the Spiders will hold support near 149.50.

The Q's are still holding above the lows made early yesterday and I interpret this as a bullish sign.

China

Here are two daily bar charts. The first one shows the action over the past three months of the Morgan Stanley cap weighted index of 300 stocks traded on the Shanghai and Shenhzen stock exchange. I have used this index in my previous post on Chinese markets.

The second chart above this post shows the action over the past year of the Shanghai composite index which seems to be more widely followed and which certainly has more price history available for it. You can see that the two indices track one another closely. So from now on I shall base my commentary on the Shanghai composite.

In my last post on China I said that the Morgan Stanley index should drop to the 3340 level and then begin a rally to new highs. In the event the average dropped to 3200 or so and since has moved to a slightly higher high. The Shanghai composite however has not yet made a new bull market high.

I think the Shanghai composite will reach the 5400 level before another substantial break begins. Support for this index is currently at 3300.

Guesstimates on June 22, 8:50 am ET

Spiders - September S&P Futures: I think the Spiders and the S&P’s have started a move to new bull market highs. Upside target for the S&P’s is 1570, for the Spiders 155.50.

QQQQ: I think the Q’s are now headed up to 48.70. I am raising the short term target a bit to 48.70

TLT - September Bonds: I expect this swing downwards to halt at a higher low near 105-18. The next swing up should carry the market to 107-20. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT should find support near 82.80 and then begin a move to 86.50.

September 10 Year Notes: Support in the notes is at 104-16 and from there the market should rally to 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: next upside target for the yen is 125.50. Support is at 122.30. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P E-mini futures, the Spiders, and the QQQQ"s. I last commented on these markets here.

As you can see the markets have bounced off of the support levels cited in the last post and I think a rally to new bull market highs has begun. I still believe that we shall see a significant top in mid-July.

Guesstimates on June 21, 8:50 am ET

Spiders - September S&P Futures: The S&P’s reached support at 1522 this morning and at this point I think the market will stabilize and begin a rally to new highs. The Spiders have support at 150.70.

QQQQ: Support is at 47.10. I am raising the short term target a bit to 48.70

TLT - September Bonds: Short term resistance is at 107-20 and support is at 106-04. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT is headed for 86.50.

September 10 Year Notes: Short term resistance is at 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is still at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen has reached resistance at 123.50. Support is still at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. August crude should bounce off of resistance at 70.00 and then head down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Never Mind !

I guess I was the one who got faked out in my last post.

Afterwards the S&P's broke decisively to new daily lows and were quickly followed by the Q's, so it looks like the futures are headed for 1522, the Spiders to 150.70 and the Q's to 47.10.

After that all three markets should move up to new bull market highs.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P e-mini futures, the Spiders, and the QQQQ's. I last commented on these markets here.

The S&P's broke below the 1540 level briefly today but I think that the move will prove to be a false breakout. The action in the Q's which held their corresponding low reinforces this view. so I am expecting all three market to start a swing upward to the upside targets noted on the charts.

Guesstimates on June 20, 8:50 am ET

Spiders - September S&P Futures: The S&P’s have so far held 1540 support and this suggests that the market will reach the 1570 level before any significant reaction develops. Spiders should rally to 155.50 at the same time. Weakness in the S&P’s below 1540 will convince me that the futures are heading for 1520 where they have a good chance of making a second higher low. The corresponding levels in the Spiders are 152.50 and 150.75.

QQQQ: Support is at 47.20. I am raising the short term target a bit to 48.70

TLT - September Bonds: Short term resistance is at 107-20 and support is at 106-20. I think the bond market has made an important low and is in the early stages of a multi-week rally of at least 5 points. TLT is headed for 86.50.

September 10 Year Notes: Short term resistance is at 105-18. I think the market has established an important low and will rally several weeks there and at least 3 or 4 points.

Euro-US Dollar: Resistance today is at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen has reached resistance at 123.50. Support is still at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – August Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Tale of the Tape

LEADERS:


GOOG: Support is at 500. Next upside target is 535.

IBM: The 98 level is support and 115 is the next upside target.

GS: I think GS is about to move above 233 resistance and rally to 250. Support now is at 220.

CME: Acting much better than I thought it would. Any break from 560 resistance should hold the 520 level. I think the market will rally to 630 before the bull market ends.

MO: Support is at 68. Upside target is 75.


OF INTEREST:


BIDU: Has reached the 150 target but is now headed for 165.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at 106. Upside target is 140.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 134.

NYX: I still think NYX is scraping bottom with support at 77 or so. The market is preparing to move up to 110.

NMX: I don’t think it will escape its 115-142 trading range.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50, resistance above the market is at 61.

SHLD: I think will hold the 172 level . Upside target is now 215.

KFT: Support is at 30. Next upside target is 39.

AMZN: Resistance is at 76. Support is at 65.

EBAY: Support is at 30.00. Market should reach 43 in a few months.

WMT: Headed for strong resistance at 55. Support is at 48.

Guesstimates on June 19, 8:50 am ET

Spiders - September S&P Futures: The S&P’s and Spiders have stalled a little below their June 1 highs for the past two trading days. Generally this kind of action means that the market is about to drop back into the lower third of its recent trading range. Weakness in the S&P’s below 1540 today will convince me that the futures are heading for 1520 where they have a good chance of making a second higher low. The corresponding levels in the Spiders are 152.50 and 150.75. In any case the next up swing will take the S&P’s to 1570 and the Spiders to 155.50.

QQQQ: The Q’s have traded at new bull market highs for the past two days. Support is at 47.20. I am raising the short term target a bit to 48.70

TLT - September Bonds: Short term resistance is at 106-20. I think the bond market has probably made an important low and is about to being a multi-week rally of at least 5 points. TLT dropped lower than I expected but the 81.50 level is very strong support and I think a sustained rally is about to start.

September 10 Year Notes: Short term resistance is at 105-00. I think the market is establishing a low and will rally several weeks from here and at least 3 or 4 points.

Euro-US Dollar: Resistance today is at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen has reached resistance at 123.50. Support is still at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Divergences Ahead

Here are three charts which I like to use to get a sense of the market's vulnerability to an extended decline of at least 10% or so. This is a longer term version of my favorite indicator, the advancing issues numbers, which I last commented upon here.

The first chart shows the daily count of the number of issues in the S&P 500 index that are above their 200 day moving averages at the close of trading each day. You can see that this number peaked in February 2007, and as the S&P 500 reached new bull market highs in May the indicator itself made a lower top. Now the S&P is attempting to make new bull market highs once more and I think it will succeed. If it does I think it is a good bet that the "above the 200 day moving average" number will make an even lower top than it did in May. If this happens I think that the drop of at least 15% in the averages that I have been expecting will start soon thereafter.

The second chart above this post shows the same indicator but over the longer time frame of the past 5 years. You can see that from this perspective the entire advance from the June 2006 low looks like one continuous uptrend which is getting long in the tooth. If we do see a divergence in the next couple of months as I think we will, the stage will be set for a drop in this indicator back down to the oversold levels it reached in June 2006 or below.

A somewhat different view of the market is shown in the third chart above this post. It is a daily line chart of the number of issues traded on the New York Stock Exchange which advance in price. The dark blue line is the 50 day moving average of this number. The horizontal red line marks what I consider to be an "overbought" level while the horizontal green lines show "oversold" levels.

There are two important observations to be made about this indicator.

First, June 2006 was the last time it visited oversold levels. More than a year has passed since then and this is an unusually long period of time for this moving average to stay above oversold levels. So this warns that a significant drop is growing near.

Second, you will see that the moving average has made a sucession of lower tops since December 2006. It may well be on its way to yet another lower top over the next month or two. If so this will constitute a striking bearish divergence and will be yet another piece of evidence that an important break lies ahead.

Guesstimates on June 18, 8:50 am ET

Spiders - September S&P Futures: The S&P’s are headed for 1570 and the Spiders for 155.50.

QQQQ: It now looks like the Q’s are on the way to new bull market highs. Upside target is 48.30.

TLT - September Bonds: Short term resistance is at 106-20. I think the bond market has probably made an important low and is about to being a multi-week rally of at least 5 points. TLT dropped lower than I expected but the 81.50 level is very strong support and I think a sustained rally is about to start.

September 10 Year Notes: Short term resistance is at 105-00. I think the market is establishing a low and will rally several weeks from here and at least 3 or 4 points.

Euro-US Dollar: Resistance today is at 134.50. Next downside target is 131.30. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen has reached resistance at 123.50. Support is still at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 51.40 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Interest Rates

In this morning's New York Times there is an above the fold, front page article about interest rates. It's headed : "Rising Rates Start to Squeeze Consumers and Companies". As you know I think it is generally good investment policy to fade the New York Times. So I take this article as confirming evidence that the bond market has made a temporary low in price and high in yield.

I think that over the next few weeks the yield on the 10 year US treasury note will drop to 5.00% or so. Then I think we shall see another rally in yields that will take the market to the 5.50% level.

The second chart you see above this post is a weekly chart of 10 year note yields going back to the 2003 low at 3.07%. Since the 2003 low we have seen a rally in yields lasting more than 4 years. I think that once the market prints a 5.50% yield a bull market in bonds will begin and last 12-18 months. During that time I expect to see the 10 year yield drop to about 4.00%.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P e-mini futures, the Spiders, and the QQQQ's. I last commented on these markets here.

I was confident that these markets had another down leg ahead before a rally to new bull market highs could begin. But this morning all three rallied past resistance. This forces me back to the bull side. I now think the futures will reach the 1570 level, the Spiders 155.50 and the Q's 48.50 before another break of as much as 20 points develops.

At the moment I am expecting a significant top in July. I think that the low we saw on June 7-8 was probably point 22 of the Domed House and that point 23 will develop in a about a month.

Guesstimates on June 15, 8:50 am ET

Spiders - September S&P Futures: The positive response to the CPI number this morning sent the futures well over yesterday’s 1542 high, so I now think the market is headed for 1568. The Spiders should reach the 155.50 level.

QQQQ: It now looks like the Q’s are on the way to new bull market highs. Upside target is 48.30.

TLT - September Bonds: I think the bond market has probably made an important low and is about to being a multi-week rally of at least 5 points. TLT dropped lower than I expected but the 81.50 level is very strong support and I think a sustained rally is about to start.

September 10 Year Notes: I think the market is establishing a low and will rally several weeks from here and at least 3 or 4 points.

Euro-US Dollar: The euro has broken support at 133.30 and is now headed down to 130.00. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen has reached resistance at 123.50. Support is still at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I still think this sector is making an important top. Resistance in XLE is now at 71 and in OIH is at 177. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September S&P e-minis, the Spiders, and the QQQQ's. I last commented on these markets here.

As you can see all three markets have rallied past the levels at which I thought they would stop. However, I don't yet think that this resistance level has been decisively violated. Therefore I am sticking with my current view that these markets are about to begin the final leg down of the drop from the June 1 top. A close today that is visibly above the today's current high that you see on the charts would force me to abandon my bearish very short term view.

No matter what happens I still think all these markets will be making new highs for the bull market in July.

Guesstimates on June 14, 8:50 am ET

Spiders - September S&P Futures: The S&P’s should stall at 1535 and then begin a move down to the correction target at 1470. The Spiders should stall at 152.50 and then begin a move down to 145.50. I am expecting new highs for the bull market in July.

QQQQ: The Q’s will bounce off of resistance near 47.30 and then drop to 45.50.

TLT - September Bonds: I think the bond market has probably made an important low and is about to being a multi-week rally of at least 5 points. TLT dropped lower than I expected but the 81.50 level is very strong support and I think a sustained rally is about to start.

September 10 Year Notes: I think the market is establishing a low and will rally several weeks from here and at least 3 or 4 points.

Euro-US Dollar: The euro has broken support at 133.30 and is now headed down to 130.00. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the September e-mini futures, the Spiders, and the QQQQ's. I last commented on these markets here.

After testing their June 7 daytime lows early this morning these markets have rallied toward the highs of their recent trading range. I now think today's rally is the first day of a two day rally that will be the third phase of a three phase corrective move up from the June 7 low. I think the S&P futures will reach 1535, the Spiders will reach 152.50 and the Q's 47.30. After this rally ends I shall be expecting the resumption of the move to the 1470, 145.50, and 45.50 targets respectively.

Once the correction from the June 1 high is complete I expect all three markets to rally to new bull market highs.

Tale of the Tape

LEADERS:


GOOG: Support is at 500. Next upside target is 535.

IBM: The 98 level is support and 115 is the next upside target.

GS: Resistance is at 233 and I still expect the market to break to 213 or so. After that a move to 250.

CME: Acting much better than I thought it would. Any break from 560 resistance should hold the 520 level. I think the market will rally to 630 before the bull market ends.

MO: Support is at 68. Upside target is 75.


OF INTEREST:


BIDU: Support is at 123. Upside target is 150.

CSCO: Support is at 25. Next upside target is 33.

AAPL: Support is at 106. Upside target is 140.

MSFT: Support is at 26.50. Next upside target is 33.50.

ICE: I now think the trend is up and that ICE is headed for 175. Meantime support is at 134.

NYX: I still think NYX has a bit more on the downside and expect to see a low in the 75-77 range. After that a rally to 115 will become likely.

NMX: Stronger than I expected but I don’t think it will escape its 115-142 trading range.

PFE: Support is 25. Upside target is 30.

AMGN: Downside target is 50.

SHLD: I think will hold the 172 level . Upside target is now 215.

KFT: Support is at 30. Next upside target is 39.

AMZN: Upside target is 76. Support is at 63.

EBAY: Support is at 30.00. Market should reach 43 in a few months.

WMT: Headed for strong resistance at 55. Support is at 48.

Guesstimates on June 13, 8:50 am ET

Spiders - September S&P Futures: I think the Spiders and S&P’s have begun another downward move which will carry both close to last week’s lows or below. My downside target for the correction which began at the June 1 top is 145.50 in the Spiders and 1470 in the futures. I am expecting new highs for the bull market later this month and in July.

QQQQ: The Q’s have bounced off of resistance near 47.20 and have begun a drop to 45.50.

TLT - September Bonds: Earlier this morning the bonds hit 104-16, a little below my 104-24 target. I think the bond market has probably made an important low and is about to being a multi-week rally of at least 5 points. TLT dropped lower than I expected but the 81.50 level is very strong support and I think a sustained rally is about to start.

September 10 Year Notes: The notes hit 103-20 earlier this morning, a tad shy of my 103-16 target. I think the market is establishing a low and will rally several weeks from here and at least 3 or 4 points.

Euro-US Dollar: The euro has broken support at 133.30 and is now headed down to 130.00. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Advancing Issues

Here are two daily line charts showing the number of issues which advance in price on a given day on the New York Stock Exchange. The purple line on the first chart is the 5 day moving average of this number while the wavy red line on the second chart is the 10 day moving average of this number. I last commented on this indicator here.

I estimate that about half the lows in all time frames in the stock market are accompanied by bullish divergences of some sort in the advancing issues indicators. A bullish divergence occurs when the market averages drop to new lows for the move while some measure of the advancing issues number holds above a recent low. Bullish divergences are significant only if a moving average has already reached "oversold" levels.

At the lows this past March the only bullish divergence visible occurred in the daily count of advancing issues which refused to make new lows even as the averages attempted repeated downside breakouts. It is much more common to see a bullish divergence against the 5 day moving average or the 10 day moving average.

Note that both these moving averages have reached oversold levels (horizontal green lines) and the 10 day moving average has rallied a bit. If the market averages fluctuate in the trading range bounded by last weeks low and yesterday's high for two or three more days, I think the stage will be set for a break to new lows for the correction which will at the same time show a bullish divergence in the 10 day and/or 5 day moving averages of the advancing issues numbers.

Such a development would set the stage for a rally to new bull market highs later this month and in July.

Guesstimates on June 12, 8:50 am ET

Spiders - September S&P Futures: I think the Spiders and S&P’s have begun another downward move which will carry both close to last week’s lows or below. My downside target for the correction which began at the June 1 top is 145.50 in the Spiders and 1470 in the futures. I am expecting new highs for the bull market later this month and in July.

QQQQ: The Q’s have bounced off of resistance near 47.20 and have begun a drop to 45.50.

TLT - September Bonds: I think the bond market has begun the process of establishing an important low. Resistance above the market is at 107-20. I still think the bonds will make another lower low, probably near 104-24. But from there the market should begin a multi-week rally that should carry it up at least 5 points. TLT should hold resistance enar 84.50 and make a lower low near 83.00. From there a multi-point rally should begin.

September 10 Year Notes: The notes are headed for 103-16 and from there a sustained rally is likely to start.

Euro-US Dollar: The euro has reached support at 133.30. If this level holds the subsequent rally should carry back to 135.40. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Guesstimates on June 11, 8:50 am ET

Spiders - September S&P Futures: I don’t think the drop from the June 1 high is over yet. Today the Spiders should bounce off of the 151.50 level and begin another leg downward. Resistance in the S&P’s is at 1527. The end of the correction from the June 1 top should occur near 145.50 in the Spiders and near 1470 in the futures. I am expecting new highs for the bull market later this month and in July.

QQQQ: The Q’s should bounce off of resistance near 47.20 and then drop to 45.50.

TLT - September Bonds: I think the bond market has begun the process of establishing an important low. Resistance above the market is at 107-20. I still think the bonds will make another lower low, probably near 104-24. But from there the market should begin a multi-week rally that should carry it up at least 5 points. TLT should hold resistance enar 84.50 and make a lower low near 83.00. From there a multi-point rally should begin.

September 10 Year Notes: The notes are headed for 103-16 and from there a sustained rally is likely to start.

Euro-US Dollar: The euro has reached support at 133.30. If this level holds the subsequent rally should carry back to 135.40. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Domed House in the Dow

Here is a daily chart of the Dow Industrials showing my estimate of the market's current position in one of George Lindsay's Three Peaks and a Domed House formation. The entire formation began in 2006 and the Domed House portion started in July 2006 at point 10 on the chart above. I last discussed this subject here.

As you can see I have labeled the recent top as point 21 and I think the market is on its way to a low at point 22 which in the Dow should occur near the 13000 level. The subsequent rally should end near 13900 and at the moment it seems likely that it will mark the end of the bull market which began in 2002. The drop following point 23 should carry pretty close to the 10700 leve at which the entire Three Peaks and a Domed House began.

Guesstimates on June 8, 8:50 am ET

Spiders - September S&P Futures: I think the low today for the Spiders will be near 147.50 and for the September futures the low will be near 1490. The subsequent rally will carry the Spider up about 2 and the futures up about 20 points. But a lower low should develop next week near 145.50 in the Spiders and near 1470 in the futures. I am expecting new highs for the bull market later this month and in July.

QQQQ: The Q’s should now find support near 45.80 today and after a rally will probably drop to 45.50 or so next week. .

TLT - September Bonds: The market dropped sharply yesterday and early today but I think this action is climactic and will be followed by a rally phase lasting several weeks. Support now is at 105-00. TLT has dropped below my initial target of 85 but should hold the 83 level and begin a sustained rally.

September 10 Year Notes: The notes are headed for 103-16 and from there a sustained rally is likely to start.

Euro-US Dollar: The euro has reached support at 133.30. If this level holds the subsequent rally should carry back to 135.40. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures and the QQQQ's. I last commented on this market here.

Tomorrow I shall be moving to the September S&P's which are now trading 15 points above June. The Spider chart looks just like the S&P chart you see here if you first divide the S&P price by 10.

As you can see the reaction I was expecting has developed into something much bigger than I had anticipated. I think that the market is in the first stage of a three stage break. We should see the S&P's make a temporary low near 1487 and then rally 20 points or so. The third stage should carry the S&P's to a more important low near 1477 (1492 basis the September contract).

The Q's should bounce temporarily from 46.25 and then make a more important low near 45.75.

Yesterday I commented on the significance of the advancing issues numbers. Today's advancing issues number is likely to be even lower than yesterday's. This is one factor that makes me think that the final low of this reaction is still a few days away.

Finally, I suspect that this break will turn out to correspond to the drop from point 21 to point 22 in the minor and major domed house formation which I last discussed here. The implication of this view is that the next rally to new highs will be the final leg of the upmove from the March low and possibly for the entire bull market from the 2002 low.

Guesstimates on June 7, 8:50 am ET

Spiders - June S&P Futures: I still think the Spiders are on their way down to 151.10 and the futures to 1510. Downside target for the September futures is 1525. From those levels the futures should rally to 1555 (Sept. futures to 1570) and the Spiders to 155.50.

QQQQ: The Q’s should find support near 46.70 and then rally to 49.00.

TLT - September Bonds: The market has reached the 107-16 level but there is still no sign of an important low. I think that the pace of the decline will begin to slow but that during this process the bonds will drop to 106-24 or so. TLT should make a low near 85.

September 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Resistance is still 135.40. Support below the market is at 133.20. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 69 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 500. Next upside target is 535.

Advancing Issues

Here is a chart of the daily count of the number of issues which advance in price on the New York Stock Exchange. The purple line is the 5 day moving average of this number. I last commented on this indicator here.

Notice that, so far anyway, today's number of advancing issues is the lowest seen since the big one day break in late February. Usually the market does not make its low on the same day as the lowest reading for advancing issues. So I think it likely that, after a brief rally, we shall see somewhat lower lows in the averages tomorrow or Friday accompanied by higher daily readings in this indicator. This would give us a minor bullish divergence and set the stage for a rally to new bull market highs.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures and of the QQQQ's. I think tomorrow trading will switch to the September contract which is trading about 15 points above June. The chart of the Spiders is very similar to that of the S&P's if you first divide the S&P price by 10. I last commented on these markets here.

I thought the S&P's would stop near 1519 but the market has gone lower, bouncing temporarily off of the level at which the break equals the length of the last break (28 points). My best guess here is that after a rally of maybe 7-8 points we shall see another drop, this time down to the 1510 level in the June futures and 1525 in the September futures (151.00 in the Spiders). From those lows I shall be expecting the market to move to new highs. The Spiders should rally to 155.50 and the September S&P's to 1570.

I still think it likely that the Q's will drop to support near 46.70. From there a rally to the 49.00 level should develop.

Guesstimates on June 6, 8:50 am ET

Spiders - June S&P Futures: I still think the Spiders are on their way down to 151.90 and the futures to 1519. From those levels the futures should rally to 1555 and the Spiders to 155.50.

QQQQ: The Q’s should find support near 46.70 and then rally to 49.00.

TLT - September Bonds: I think that this market is headed for 107-16. Resistance above the market is at 109-14. TLT will follow the trend in the bonds and will probably drop to 85.00.

September 10 Year Notes: The notes are headed for 104-20. Resistance above the market is at 107-08.

Euro-US Dollar: An extended decline is underway. Resistance is still 135.40. Support below the market is at 133.20. I think that the market will eventually drop to 125 or lower.

Dollar-Yen: The yen is headed for 123.50. Support is at 121.10. I expect to see the yen trade at 130 later this year.

XLE - OIH - USO – July Crude: I think XLE is making a top near 68 and that OIH is making its top near 173. The next significant move in both will be downward. USO should drop to 45 or lower after bouncing off of 50.60 resistance. July crude has completed a rally phase and is now headed down to 55.00 and eventually lower than that.

GLD - August Gold: I think GLD has started downward and will drop below 60 on its way to much lower levels. August gold should hold resistance at 696 and drop below 600.

SLV - July Silver: SLV is on its way below 120. July silver is headed below the 1200 level.

Google: I think Google is headed for 564. Google should hold support near 487. Next upside target is 535.

S&P's, Spiders, and QQQQ's

Here are hourly charts of the June S&P futures and of the QQQQ's. The chart of the Spiders looks just like the chart of the futures if you divide the futures price by 10. I last commented on these markets here.

I think the S&P's are on their way to 1519 or so and that during that time the Q's will drop to support around 46.70. The next move up should carry the S&P's to 1555, the Spiders to 155.50 and the Q's to 49.00.