The SPX futures are rallying during this Labor Day Holiday. The chart below pretty much explains what I'm looking for this week. On the sentiment point, we have excessive bearishness: large specs short volatility, while the small specs are long volatility and high P/C ratios... this is fairly bullish, at least in the short term.
The stock market tends to rally to and around the new moon, which is due on Sept 13 (it is also the Shemitah...Jewish 7-year cycle and a solar eclipse). My best guess forecast is shown in the chart below. The highest odds surround around Sept 10/11 as being an important top before we crater into OPEX/Futures expiration (Triple Witching) surrounding the FED meeting and possibly implicating it as being cause de jour for another market drop. My best guess based on the IMP formation (shown in previous articles), pivot point support and X of B in previously observed IMP's is a move down to around 1850 SPX, nearby to the 17/18th of September dates. Keep in mind that all these targets are just guesses. I believe we take out 1993/94 SPX on the upside this week, but I can't say how much, perhaps 2005 (or less), but it seems the 2014/15 FIB target is getting much more elusive.
GDX and GLD are running into the expected 8 TD low due Tuesday Sept 8. Gold is down about $3 to $4. It looks as though GDX needs to rally into the 15th or so and my guess is into the $15 plus range before plummeting by week's end to new lows. Whatever the FED announcement will be, it doesn't look good for stocks and gold, IMO.
I do expect a monster rally in gold into early October and a fairly decent rally in stocks as well before the final C wave takes its toll down to around the expected 1700 level SPX between or around Oct 5-12.
Brad Gudgeon, editor and author of the BluStar Market Timer, is a market veteran of over 30 years. The subscription website is www.blustarmarkettimer.info
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