ETF Watch: On the Sidelines in SPY

Our Bayesian Timing System (BTS) is on the sidelines in trading the U.S. equity indices as bears and bulls battle it out.  In general terms, the path to the 290's on the SPDR S&P 500 (SPY) is still on the table – the real question is how deep of a correction will be seen in the short term.  In terms of targets on the downside, consider 278-280; much lower than that and the immediate path higher to the 290's will become more complicated. 

Looking at oil, our vibration high on July 3 has held, and the BTS continues to see this as a wave B top with targets in the low 12's on the US Oil ETF (USO) and possibly the low 11's once this bullish sentiment clears out.  

In metals, the false-break low potential continues to present a bottoming position from which to begin a longer term rally.  A spike lower the week of August 13 is about all this bottoming positioning will be able to withstand.  On a micro level there is one more Bayesian probability (BP) cluster that keeps the SPDR Gold Shares (GLD) long signal intact in the low 112's.  On the upside, on a micro level closing above 114.90 should target 115.75 at a minimum.  Getting above 117 in the GLD starts to get the "bottom is in" BTS chatter going, whereas getting above 118.50 kicks it into high gear. 

Above 118.50 and a re-challenge of important resistance at 120.25-120.75 needs to be cleared. The multi-month “all clear” won’t be achieved until a daily close above 121.50, which should begin a rather straight up shot to as high as GLD 133-135.  Intermediate-term targets of 123-124 are presenting as a BP path over the next several weeks. 

Regarding the Gold Miners ETF (GDX), yesterday’s action triggered an “on the clock” for GDX, which remains in effect the remainder the week.  Basically, whatever the low ends up being this week, should not be exceeded on a closing basis next week, and ideally the low of August 13 should not be closed beneath.  iShares Silver (SLV) and GLD did not trigger on the clocks.

In natural gas, our signal remains long.  The US Natural Gas ETF (UNG), as expected, has tackled getting above 23 and then 24.  Consolidating above 23.50 would be healthy for higher prices.  Still working towards 25 and higher.  

Among other ETFs to watch:

DBA: Signal Long.  The basing area of mid-July still presents as a multi-week to multi-month bottom with DBA still hovering above it.  The vibration low from a few weeks ago was broken (DBA 17.20 level); getting back above 17.20 imminently is required to keep this long signal alive – of which it did on 8/15.       

EEM: Signal Long.  As of 8/15, still within the basing area above 42… much time below 42 could force the BTS’s hands on this one.  

UUP: Signal Short.  Action on 8/15 into 8/16 should set the tone for the false break potential of UUP above the 8/6 vibration high.  Although I don’t usually comment on individual currency pairs, the EUR shows a high likelihood to set at a minimum bounce low on 8/15 which most likely implies an impending top in UUP.

XME: Signal Long.  XME has been unable to turn up from this bottoming process.  A good set up that initially materialized but has since faded.  Life support for this signal.

XBI: Signal Long.  The BTS continues to like this staging area for a press to ATHs.  Needs to close above 96.25 to get the ball rolling again.  Getting back to 98s is still the most likely path and then either to ATHs or back to neutral.  Regardless, the BTS still likes the RR on this trade. 


Luke Miller, who has developed a Bayesian timing system for trading the stock market, hosts two Bayesian timing premium services at ElliottWaveTrader.