Between late April and early May I stated that if the DOW got into the 18100-18500 range if I was a long term investor I would be 100% in cash. I was expecting a push down to 16100 in the second or third quarter. If we got that push down I was looking for the market to turn back up in the 4th quarter, erase the losses, and be up on the year. The market pushed down to a low of 15379 and I stated that I was 75-80% certain that the lows were in for the year. A couple weeks ago I stated I was 100% certain that the lows were in for the year.
Currently year to date the NASDAQ is up over 8%, the S&P 500 is up over 2%, the DOW is unchanged, and the Russell 2000 is down about 1.5%. There are 41 business days left in the year with November and December typically being bullish for the market. I do not believe the Federal Reserve will raise interest rates in November or December. I expect the market to make a series of higher lows between now and the end of the year. Currently the SPY (ETF which mirrors the S&P 500) is $7 away from the 50 bar moving average on my daily charts. The market is a little ahead of itself and I am looking for it to pull in before moving higher into the end of the year. At year’s end I believe the NASDAQ will outperform the market and be up double digits, the S&P 500 will be up 5-10%, and the DOW and the Russell 2000 will be up 4-7%. I expect the Federal Reserve not to do anything in the next two months, pushing the market upward.
I stated I was looking to buy gold in the 1145-1155 range. If I got this pullback I was looking for a move up to the 1175-1180 range. Gold pulled back to 1158 and then traded up to 1180. I then stated I would be out of gold and that I was bearish gold long term. Gold has dropped around $50 in the last week, trading down to 1131. I now have a sell signal on gold on both the daily and weekly charts. I am waiting for a bounce in gold where I would look to short gold on an overbought condition.
I stated I was looking to buy oil in the 40-43 range. Oil traded down to 42.58 and I stated that I would look to be flat oil going into the inventory number, after which oil traded up to 46. Oil is overbought on the daily chart and I am looking for oil to pullback and make a higher low in the 41.50-44.50 range. Oil on the weekly chart is showing strength. After we get this pullback and oil goes from an overbought to an oversold condition on the daily charts I expect oil to trade up into the end of the year.