Mumble jumbo but of merit by proof of pudding
... latest Expanded Weekend U.S. Market Forecast Report, issue no. 3974 as of Friday, October 16th, 2020, is now available at www.technicalindicatorindex.com
Today's Market Comments:
We start with the vital statistics, then move onto the pattern forecasts for the markets, then the economy.
Stocks were mixed Friday, on high volume, and narrow breadth. The Industrials closed up 112, Trannies closed down 152, the S&P flat, Techs down slightly. The day started with decent gains, but the markets gave up most of the gains into the close, forming a Shooting Star candlestick pattern on the daily charts, which is oftentimes followed by a down day or two.
There were no changes to our key trend-finder indicators from Friday's price action.
There is another phi mate turn date scheduled for next Friday, October 23rd, 2020, +/- a few days. The last phi mate turn date was ideally scheduled for October 1st +/- a few days, which ended up being a bottom on September 24th, the Industrials' bottom for the September decline at 26,537, 5 trading days early, a phi .619 from the November 1st, 2012 high and the January 14th, 2000 inflation adjusted all-time high.
The Industrials look to be rising inside Primary degree wave (C ) up (which started at the September 2020 lows) of Cycle degree wave B-up, within the new Bear market from February 2020. This is the final rising phase for corrective Cycle degree wave B-up (which started at the March 2020 lows). See charts on pages 32 to 34. Within wave (C ) up, stocks are tracking a five subwave move for (C ) up that started at the September 2020 lows. The first subwave Intermediate degree wave 1-up completed October 12th. Since then the Industrials have been dropping inside a corrective wave 2-down. This is an a-down, b-up, c-down move. The final subwave c-down of 2-down may have started with the afternoon decline Friday, October 16th. Once subwave c-down bottoms, likely around our October 23rd phi mate turn date, a strong rally leg should start, wave 3-up of (C ) up. The S&P 500 and the NASDAQ 100 are tracking similar paths.
Gold is inside a corrective Primary degree wave (2) down move that started in early August 2020. In the chart on page 48, we show a declining Bullish Wedge pattern that may be occurring for Gold. If so, Gold is in the final subwave E-down for the pattern, which has a possible downside price target of 1800 to 1825ish. Once complete, Gold should explode higher in Primary degree wave (3) up. The touch points are pretty good for this pattern, which lends some weight to this scenario. Mining stocks have also been correcting since early August in an extended sideways move. We show a chart on page 53 that continues to lack clarity as to whether this correction is nearing completion or has more downside coming. Once complete, Mining stocks should rise sharply.
We have updated charts for Currencies, Oil, Treasuries and the VIX on pages 54 to 60.
As for the fundamentals of the Economy, we learned Friday that the Federal Budget Deficit exploded to $3.1 trillion for fiscal year ending in 2020, which was the worst ever, more than three times greater than last year's $984 Billion deficit. It was also more than twice the previous all-time worst deficit, $1.4 trillion in 2009. The 2020 deficit was the highest percent of GDP since 1945, during WWII, at 15.2%. The only way out of this hyper deficit is to inflate out of it, which devalues all assets in the U.S. with extraordinary monetary expansion by the Fed; to raise taxes on Americans and Businesses to something that will tank everything into poverty; or to hope that the economy will suddenly grow at historically record levels starting immediately. You are President of the U.S. -- take your pick.
We also learned U.S. Industrial Production, the output from factories, mines and utilities, fell 0.6% in September, per the Federal Reserve.
We also learned that 55 million people in the U.S. now live in poverty, an increase of 8.0 million since May 2020, and an increase of 6.0 million since July 2020, according to several studies from Columbia University, The University of Chicago, and Notre Dame University. The poverty line is $26,000, anyone earning up to that amount is considered impoverished for purposes of these studies.
We learned Thursday that Initial Jobless Claims rose to 898,000 last week, the most since late August. 10 million people are collecting unemployment benefits at this time. Interestingly, many retail establishments in our area of southeastern Pennsylvania can't find or keep workers. Now Hiring signs are all over the place. Many people are preferring the free money from the government instead. Welcome to socialism, the deliverer of shortages.
Gold, Silver and Mining stocks were mixed and near the flat line Friday. The HUI key trend-finder indicators remain on a Buy signal, but are weakening.
Our Blue Chip key trend-finder indicators generated a Neutral signal October 14th, 2020 and remain there Friday, October 16th, 2020. The Purchasing Power Indicator component triggered a Sell signal Wednesday, October 14th. The 14-day Stochastic Indicator generated a Buy on September 28th, 2020, and the 30 Day Stochastic Indicator generated a Buy on September 28th, 2020. When these three indicators agree, it is a short-term (1 week to 3 months' time horizon) key trend-finder directional signal. When these three indicators are in conflict with one another, it is a Neutral (Sideways) key trend-finder indicator signal.
Our intermediate term Secondary Trend Indicator generated a Buy signal Wednesday, May 20th, and remains there Friday, October 16th, falling 4 points (out of a possible 9 points), to positive + 21. It will need to fall below negative - 5 for a new Sell signal.
Demand Power Fell 3 to 434 Friday while Supply Pressure Fell 2 to 399, telling us Friday's Blue Chip price move was weak. This DP/SP Indicator moved to an Enter Long Signal October 5th, and remains there Friday, October 16th, 2020.
The HUI generated a key trend-finder indicator Buy signal October 9th, as the HUI 30 Day Stochastic triggered a Buy signal October 9th, 2020, and our HUI Purchasing Power Indicator generated a Buy on October 9th, 2020. When these two indicators agree, it is a directional signal, and when at odds with one another, it is a combination neutral signal. The HUI Demand Power / Supply Pressure Indicator moved to an Enter Short signal August 21st. On Friday, October 16th, Demand Power Fell 4 to 383 while Supply Pressure Rose 2 to 395, telling us Friday's HUI decline was mild.
DJIA/SPY PPI was Flat at negative -49.75, on a Sell
DJIA 30 Day Stochastic Fast 80.00 Slow 79.33 On a Buy
DJIA 14 Day Stochastic Fast 76.67 Slow 85.00 On a Buy
DJIA % Above 30 Day Average 80.00
DJIA % Above 10 Day Average 63.33
DJIA % Above 5 Day Average 43.33
Secondary Trend Indicator Fell 4 to Positive + 21, On a Buy
Demand Power Fell 3 to 434, Supply Pressure Fell 2 to 399 Buy
McClellan Oscillator Fell to Positive + 8.25
McClellan Osc Summation Index + 2154.21
Plunge Protection Team Indicator -4.63, an "OFF" signal
DJIA 10 Day Advance/Decline Indicator + 269.1 on a Buy
NYSE New Highs 122 New Lows 9
Today's Technology NDX Market Comments:
The NDX Short-term key Trend-finder Indicators generated a Neutral signal Wednesday, October 14th, 2020, and remain there October 16th, 2020. The NDX Purchasing Power Indicator generated a Sell on October 14th, 2020, the NDX 14 Day Stochastic triggered a Buy on October 8th, and the 30 Day Stochastic triggered a Buy signal on September 28th, 2020. When all three component indicators are in agreement on signals, it is a consensus directional signal. When they differ, it is a sideways signal.
The NDX Demand Power / Supply Pressure Indicator moved to an Enter Long positions signal Wednesday, October 7th and remains there October 16th. On Friday, October 16th, Demand Power Fell 4 to 465, while Supply Pressure Fell 2 to 443, telling us Friday's decline was mild and due more to a lack of buying rather than a strong urge to sell, which is not Bearish at this time.
The NDX 10 Day Average Advance/Decline Line Indicator triggered a Buy signal September 10th, 2020, and needs to fall below - 5.0 for a new Sell. It rose to positive + 27.4 on Friday, October 16th.
NDX PPI Fell 2 to 231.11, On a Sell
NDX 30 Day Stochastic Fast 82.93 Slow 81.95 On a Buy
NDX 14 Day Stochastic Fast 76.19 Slow 83.33 On a Buy
NDX 10 Day Advance/Decline Line Indicator + 27.4 On a Buy
NDX Demand Power Fell 4 to 465, Supply Pressure Fell 2 to 443 Buy
RUT PPI Fell 1 to + 94.46, on a Buy
RUT 10 Day Advance/Decline Line Indicator + 306.1, On a Buy
Today's Mining Stocks and Precious Metals Market Comments:
Our HUI key trend-finder indicators moved to a Buy signal October 9th, 2020.
HUI PPI Fell 2 to 283.31 on a Buy
HUI 30 Day Stochastic Fast 40.00, Slow 50.56 on a Buy
HUI Demand Power Fell 4 to 383; Supply Pressure Up 2 to 395 Buy
McHugh's Market Forecasting and Trading Report and this Executive Summary |
