U.S. Indices Continuing to Look Higher

As long as support near 290 continues to hold, we continue to look up in the U.S. indices.  Getting back above 292.50 in SPDR S&P 500 (SPY) should get that advance to 295, and then to the low 300s.  On the downside there are Bayesian Probability (BP) support clusters at around 288 and 286.  Regardless of this price level (i.e. low 290s) or higher in the low 300s, a larger decline potential does still appear on the horizon. 

But for now the draw of the low 300s is keeping the signals long.  Basically, as has been mentioned since these signals went long, SPY is stuck in between 290 and 292.50; further, as has been discussed numerous times, both QQQ and IWM are behaving as would expect toddlers to behave – QQQ is behaving and IWM is not.  There remains a BP support cluster at the recent low in the mid-289s that needs to be watched.  And below 286 opens up bad things for Longs.  As such, we remain in chop-fest territory until resolution.

Moving to oil, our signal is US Oil (USO) short.  There remains a BP path for a reversal from approximately these levels (anywhere between 15.85 than 16.35) back to the mid-13s.  I will most likely switch USO over to a trending stochastic process after this signal is closed out – that will be a quicker and more responsive signal.  Regardless, and only in hindsight is it this painfully obvious, the trending process would have performed significantly better on USO over the last year. 

In metals, signals are Gold Miners (GDX), SPDR Gold Shares (GLD), and iShares Silver Trust (SLV) long.   Another attempt at 114 in the GLD pushed back yet again.  The inability to push thru 114 puts on hold the most bullish BP path that has higher targets of 120 and then 123 into year end.  Really at a tipping point here, as a failure to hold this region could send GLD back down to test its August lows.  

Anecdotally, I would add that wide ranging daily moves over several days that GLD has exhibited for several weeks are typically signs of a bottoming process.  The problem with bottoming processes is that they can extend an uncertain amount of time and when they do break “everyone” is watching the same trigger points and prices move very quickly.

Among other ETFs:

UNG:  Signal Long.  UNG continues to work its way higher and is properly in the 26s.  UNG is has its sights set on mid-October for some type of top.  Let’s see if that 28 region is hit.

UUP: Signal Short.   UUP continues to pressed slightly above the BP resistance cluster in the 25.30s.  Getting back below 25.10 remains very important for that shot down to the low 24s.

XME: Signal Long.  XME is consolidating back to the 34-34.50ish level; important next several trading days if that launch to 36.75 and then 38 will materialize.  

XBI: Signal Long.  After getting below the 94 region on 10/2, XBI was able to use the BP stretch to get back above the 94 region and challenge the HOD of 10/2.  Encouraging bullish behavior, but more is needed to get the ball rolling uphill.  On the micro level, there is BP resistance at 95.75 that needs to get hurdled.  Getting back above important BP resistance at 97.50 still has a tradable chance to get to the 100s. 

EEM:  Signal Long.  Still in a nice RR basing area for higher prices.  Still close enough to that expected 42.50 level that things are hanging on.  The expected bounce on 10/3 did occur, but was not sustained.  This signal is getting close to a decision.

DBA: Signal Long. DBA was able to get above 17.10 and a nice little firework show pushed it to the 17.30s; Presently, just consolidating.  Back above 17.60 could see a shot at 18.50.

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