Short-term US Equity trends are bullish and likely begin to accelerate higher into mid-October before finding much resistance. Despite the bearish seasonality trends, it’s hard to be too negative on recent price action, which combined with rising momentum and above-average bullish breadth, necessitates a bullish stance into October. Triangle patterns have been exceeded to the upside for SPX, DJIA and NASDAQ, and are forthcoming for Russell 2000 index. Following the Fed’s first interest rate cut in over four years, precious metals look to be showing parabolic strength while both the US Dollar and US Treasury yields start to stabilize. Overall, without evidence of any serious technical damage, it’s difficult turning too negative on US equity markets.
To recap this past week, the major Equity indices all look to have resolved their two-month triangle patterns by upside breakouts, and trends have gotten better this week not worse, despite both weekly cycles and seasonality trends arguing for possible downside volatility into November.
While I respect these intermediate-term cycles over time, the shorter-term cycles call for strength into mid-October, and above-average bullish market breadth readings combined with lack of DeMark weekly exhaustion and less than bullish market sentiment still call for additional strength.
Outside of Equities, the FOMC’s rate cut coincided with further evidence of the US Dollar and US Treasury yields stabilizing near support which might lead to a bounce.
I suspect that given the FOMC’s focus on Labor more than inflation these days likely translates into the positive correlation between Equities and Treasuries in 2024 slowly dissipating. Thus, bad economic news in the future might not be good for Equities, and vice-versa.
The chart below highlights the NASDAQ Composite which has just exceeded August highs. This is a bullish development that should augur well for a continued advance to retest all-time highs from July. At present, it’s looking increasingly likely that the rebound in large-cap Growth stocks might continue, and many of the current triangle patterns in “Magnificent 7” stocks could be resolved by upside breakouts. See this week’s technical progress below.
Nasdaq Composite Index
Natural Gas breakout should bode well for strength into October
The move in Natural Gas this week looks to have finally confirmed a bottoming process which can help Natural Gas show further upside acceleration over the next 1-2 months before seasonal weakness starts to take hold.
Charts of UNG -2.59% , shown below, the United States Natural Gas Fund LP, has broken out above two former highs in Friday’s trading, which puts this at the highest levels since mid-July.
This is a bullish development, which likely jumpstarts further gains up to technical targets at $16.94-$17.05.
This resistance lines up with UNG -2.59% ’s Ichimoku Cloud, along with representing a Fibonacci alternate wave projection from the initial lows of early August.
Thereafter, I suspect that Natural Gas might reverse course and fall into 2025 which would align with its bearish weekly cycles.
This entire pattern from early August is thought to represent an ABC-type corrective bounce.
United States Natural Gas Fund LP
Gold Cycles show Gold’s rise to likely be on borrowed time in the short run
This weekly cycle composite on Gold going back since 2000 shows that Gold’s sharp rise from the most recent swing lows in 2023 could be on borrowed time.
While the short-term and intermediate-term cycles appear bullish, I think it’s right to be on the lookout for signs of a peak in October. The comments below are my mid-day Flash Insights comments on GLD 0.45% :
Gold and Silver are both higher by more than 1.3% today, and precious metals outperformance has begun to accelerate this week following the genesis of the Fed’s Rate cut cycle. GLD 0.45% the Gold SPDR ETF, has begun to trade more parabolically on weekly charts, and given the lack of exhaustion signals on GLD weekly charts, this remains very well positioned to continue higher into October. However, monthly DeMark signals have just triggered (but not confirmed) monthly TD Combo 13 Countdown signals (“Sells”) while Quarterly GLD charts are on a 7 count, with October kicking off a new quarter that could bring about an 8 (of a possible 9). Thus, this move in Metals very well might not continue all year. However, the next 4-6 weeks look quite promising for both Gold and Silver, and Gold. GLD 0.45% ETF has upside targets at $249-50 initially, then $267 which I feel is possible over the next month before the start of some consolidation.
Thus, technically speaking, nothing looks wrong with Gold right now and prices are escalating in parabolic fashion. However, given that DeMark signals could be complete in 3-4 weeks on further price gains and would line up possibly with monthly and quarterly signs of exhaustion for GLD, I think it’s right to consider taking profits on gains into October, awaiting consolidation for a better risk/reward profile.
Selling pressure might also materialize if the US Dollar and Treasury yields begin a larger bounce. Such a move would likely result in Gold turning lower if the past positive correlation between Treasuries and Gold continues to work in the future.
At present, it is preferable to trust price action over weekly cycles, which could be incorrect. However, on any instance of Gold pushing higher into October and then reversing course sharply to break uptrends, I would suspect that cyclical selling pressure could be getting started. For now, higher prices are likely for Gold into next month.
Gold Cycle
Two New UPTICKS long selections: NRG and UBER
I’ll release my September UPTICKS report next week but wanted to highlight in advance two stocks that I’ll be adding to my list. The entry price will be today’s closing price on 9/20/24.
I’ll discuss these individually in bullet form along with showcasing the charts for each below.
NRG Energy (NRG 1.50% - $87.09)- Bullish range breakout
Beautiful triangle pattern breakout which had begun in May 2024
- A larger 15-year range breakout happened last November 2023.
- Power Generation stocks look excellent technically.
- The initial resistance zone is $94-$96, then $102-108 which has more importance.
- Minor pullbacks next week should find strong technical support at $83, while $76 is intermediate-term support.
NRG Energy
Uber Technologies (UBER -0.61% - $73.94)
- Bullish consolidation pattern breakout this week.
- UBER reached the highest level since April 2024 before minor consolidation late this week.
- Volume has been very supportive since August, showing far greater volume on advancing days, which adds conviction to recent strength.
- Elliott-wave theory shows the February-August (Three-wave ABC) decline being a corrective wave that now should yield to prices pushing back to new all-time highs.
- Initial resistance lies at $82, but getting above there allows for a push up to $93.
- Support on price weakness could materialize near $72 while $67 represents a more important support level which if/when breached would postpone the advance.
Uber Technologies
