Monthly Analysis: Financials

2023-10-01T09:29:28-05:00October 1st, 2023|Monthly|

The S&P 500 ($INX) remains in a major (long-term) 5-wave uptrend, with the 2-month selloff fitting with the normal seasonal pattern for August and September. While the Benjamin Franklin Fish Similarity tells us we could expect a third lower month during October, historically the $INX tends to rally 3% during October. Theoretical Positions: Long from the October 2022 close of 3,871.98 with a possible stop below the June 2023 low of 4,171.64.

The Dow Jones Industrial Average ($DOWI) remains in a major 5-wave uptrend. As with the S&P 500, it would not be surprising to see the $DOWI move lower during October as part of a Benjamin Franklin Fish Similarity (Like guests and fish, markets start to stink after 3 months of moving against the trend). Theoretical Positions: Long from at least the October 2022 settlement of 32,732.95 if not the breakout of the September high at 32,504.04. Possible stops would be placed below the 4-month low of 32,704.51 from June 2023.

The Nasdaq ($NASX) remains in a major uptrend. As with the other indexes, the $NASX has closed lower 2 consecutive months and could see continued pressure in early October. Theoretical Positions: Long from the October 2022 close of 10,988.15 with a possible stop below the June low of 12,096.89.

The US 10-year T-note (ZN) broke to a new major downtrend as it fell to a low of 107-07 during September. This was the lowest the 10-year had been since August 2007. Theoretical Positions: It’s possible longs might’ve been established at the November 2022 close of 113-070 based on monthly stochastics and a possible 2-month reversal. Additional longs could’ve been established when the ZN took out the high of 116-080. If so, the average long would be roughly 114.575. These positions would’ve been stopped out with the move below the August low of 108.28 during September for a loss of 6.295.

Gold (Cash Index): The cash index extended its major downtrend to a low of $1,846.70 during September. The next downside target area is between $1,837.72 and $1,785.43. Theoretical Positions: Short positions could’ve been established near the May settlement of $1,962.56. Additional shorts could’ve been established with the new 4-month low during August below $1,894.13, putting the average at 1,928.35. Buy stops would be placed just above the previous 4-month high of $1,987.26 from July.

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