Monthly Analysis: Financials

2023-11-04T08:07:40-05:00November 4th, 2023|Monthly|

The S&P 500 ($INX) remains in a major (long-term) 5-wave uptrend, with the 3-month selloff through late October looking to be a down wave (Wave 2 or 4) in the major pattern. If this is true, then the $INX would be expected to take out its previous high of 4,607.07 (July 2023) over the coming months. Theoretical Positions: Long from the October 2022 close of 3,871.98 with a stop below the October 2023 low of 4,103.78.

The Dow Jones Industrial Average ($DOWI) remains in a major 5-wave uptrend. As with the S&P 500, it was not 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). The $DOWI is now in position to resume its uptrend and is expected to take out its August 2023 high of 35,679.13. 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 3 consecutive months and is now expected to take out its July high of 14.446.55. Theoretical Positions: Long from the October 2022 close of 10,988.15 with a possible stop below the October low of 12,543.86.

The US 10-year T-note (ZN) extended its major downtrend to a low of 105-105 during October. However, early November finds the ZN posting a strong rally, putting itself in position for a potential bullish 2-month reversal at the end of November. 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. We will wait to see if another bullish reversal pattern is completed during November.

Gold (Cash Index): The cash index extended its major downtrend to a low of $1,812.39 before finishing October with a bullish outside range. This move indicates gold could now test its previous series of highs near $2,070.50. 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’ve been triggered just above the previous 4-month high of $1,987.26 from July, creating an average loss of nearly $59.

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