US Stock Indices Analysis | SPX SP500 NQ100 NASDAQ Bonds Dollar Gold Technical Analysis - 25 AUG 24

investors and Traders welcome to the channel Market shot P today is 25th of August 2024 I hope everyone is having a great weekend uh this video is for educational purposes only and it's not a financial advice first of all apologies for lack of videos uh the past week um it's because of some um engagement with the family um it's the kids holidays in the United Kingdom um so it's a pretty busy time uh but I do promise that next week I will be making a lot more vide videos uh and we'll be taking a look at um you know regular segments such as the technology stocks the financial stocks and also the sectors in the uh US Stock Market so the chart we are looking at is the daily chart for the Dow Jones Industrial cash index uh this one has our timing model on it in this video I will not be going into the details of how this model is constructed uh you can look it up in the archives um we have been using this model for quite a number of months now and it has got an uncanny ability to pick the turns in the market um so most recently we were watching for a minor timing to come in uh that timing was uh between 20th of August to uh 21st of August with timing we have to give one to two trading days either side uh so we just saw the market go sideways and in fact uh last Thursday just a day before the U Federal uh reserves chairman Mr Paul's speech at the Jackson Hall uh the market had actually um closed lower on all the major indices um so this was a minor timing and that we just saw Market just go sideways and we have now the major timing coming in which is between the 29th of August to 3rd of September on the Dow Jones Industrial um cash index so make a note of that that's going to be an important one and after that we have the 10th of September as well now if we take a look at the uh nikai um here we go there is some timing on the nikai as well and what nikai is telling us this is the Japan's uh stock market index um a key date it's highlighting 5th of September and the 19th of September so the 5th of September is in close proximity to what we are taking a look at um Dow Jones Industrial as well so a key important date to uh make a note on the 5th of September uh one more Point while we are looking at this one is uh when the Japanese index fell and this was you know one of the largest uh uh Falls it has seen in one day um the market actually went to really key levels uh and one of them was this uh 61.8% retracement of the 2022 lows and also the 1.618 extension of the ab swing from projection from the CD swing so we had number of Confluence of two major ratios coming together um which is always something we really like to take a look at and what the market has done is this far it has only retraced 50% so keep this in mind because when we'll take a look at the US Stock indices uh we'll see a fair mod difference but we'll also be doing something really interesting for the US uh stock indices will be going back in time and I'll show you uh how the market was actually looking back then and there seems to be some quite a lot of similarities but this time it might be a little bit different uh okay so we'll have a quick look at the dollar Index um so here we go dollar um as we were we have been seeing for quite some time uh 107 level has been a um really important top in the market the market has not been able to take that out uh we were really highlight in back around uh month of May that this open Gap U you know the market was likely to get there also it was the 1.6.8 ex uh expansion uh Market just filled that Gap and it's just not being able to take that out uh so what it has done is it actually has exceeded um the initial Target we were watching for which was in this gray Zone and then further uh Target was at the bottom of this uh range this uh if you look at it is just entirely uh big really big trading range uh and once it fell below the 78.6% retracement and below this trend line in Blue uh it meant that okay there's a lot of weakness uh in this US dollar um so what is likely to happen now is because we are um you know at really um sort of um from a structural perspective a possible support level so the market might actually should find some support from this level might bounce a little bit for a day day or two uh but looks like this market now wants to head lower uh and here we go this is the uh weekly chart for the uh dollar Index and here we had highlighted this gray area which is in actually a gap formation um so the market is actually likely to go and fill this Gap in it might actually dip into it maybe 50% it's also possible it goes and actually test these lows of the 70th of July from 2023 um so from our perspective the 99 level is really key if the market breaks below the 99 uh level on a closing basis uh then uh it would actually mean that the US dollar could uh actually go move lower rather quickly uh and will actually trigger this big ABCD to the downside which could in fact see uh these lows around 89 88 level being tested tested um so um you know us do is likely to go fur we weekend further um we have the technicals um you know um telling us that uh and also another thing about the US dollar is if you look at this period uh from 2021 right into the September of 2022 that's when the feder reserve started hiking its interest rates so really really aggressively um and also so what the this has actually done and what it has actually served is because US dollar is the world's Reserve currency with a strong dollar the US has actually managed to export a lot of its inflation out to the rest of the world because we have seen um other currencies such as uh the British pound the Euro actually reaching levels which are really depressed levels uh on historic basis so that's why we have seen and such as um in United Kingdom the inflation figes being higher than perhaps in the Euro Zone but now with the Federal Reserve reaching its kind of U uh objective of 2% inflation uh quite likely achievable uh now I think U you know we're going to see uh the US dollar actually weaken uh because of uh the possible cycle starting from September of where the interest rate Cuts will come in and what what it will do is if you look at some some of the inflation data if you break uh the reports of CPI out um there are two main components to it there is actually inflation coming in for example from uh produce uh so that those are products for example imported from China or elsewhere in the world so these are kind of you know U inflation coming from consumption of products and then there's inflation from services so the data suggests that um also because of what else is happening in rest of the world in terms of demand Etc uh and the freight rates uh way lower than what they were in the um during the pandemic time uh the inflation coming in from uh the products being imported is actually uh pretty tame uh and it's actually likely to move lower and the component coming in from uh the surfaces um that remains uh slightly elevated but over time it's also actually likely to um reduce and one of the reasons is that one of the key things to watch is the unemployment rate and jobless uh claims that come out so th that sort of essential data to watch in my opinion because if the unemployment rate is likely to go up it's actually going to put some pressure on the services as well um because maybe the consumers who are using um service based products uh they might actually pull back a little bit so that inflation could actually uh tame as well so um what we're going to see is now with the US dollar getting weaker the other currencies such as Euro the British pound um you know they are likely to benefit uh in terms of appreciation in their currency value which is actually going to help their inflation uh go lower on an accelerated basis because the value of their currencies will uh appreciate so anything uh those countries are importing uh which you know because of dollar being stronger the currency's values being lower U had actually were costing them more it will begin to cost them less now um so that way we're going to see uh rest of World actually also getting closer towards achieving whatever their central banks have got as a Target which is usually 2% in let's say Great Britain and also in the Euro zone so that's going to be an interesting uh thing to watch so now I'm going to shift over to uh the interest rate markets and we'll be actually taking a look at um those markets um slightly different to what we usually do so just a recap this is the daily chart for the um shorter end this is a two-year trasy note and here what we are looking at is basically this big black ABCD pattern which actually met our Target of 39 3.9% and actually went a little bit lower and then it's just gone sideways we watching for this uh 4. 1% to 4.2% but it's finding a lot of resistance on 4.1 uh% now the interesting thing is that if we were to actually um add the 10year treasury uh here oops actually let me get rid of it I want to add it to a separate pin because that way it's a little bit easier to see so here we go uh in a new PIN boom so what we can see is that um the currently as of last Friday's close the 2-year trading not is yielding 3.9 3.92% whereas a tra uh 10 year which is longer duration is yielding 3.8 1% so what it means is that we have some yield curve inversion because typically we would expect the longer end of the curve to have higher yields and that's normal and the reason is because when we are investing if it is of a shorter duration then our risk is less such as default risk such as reinvestment risk just because the duration is uh less so the investor is likely to get the money back quicker uh reinvestment risks such as the coupons coming back they could be reinvest invested so money could be made just on the coupon payments being reinvested all of those things so when the duration is stretched out uh 10 years for example or beyond that investors would want to have higher yield because you know one is taking more risk but here what we see is that the 10-year treasury note is actually yielding um 3.8% which is uh a little bit less than what the two-year trasy node is um yielding so in my opinion what is likely to happen is when the FED actually starts its uh red Curr uh program um the FED fund rates which are still uh five above 5% they will begin to actually move lower uh which would actually you know then begin to impact the shorter end of the curve as well so we should begin to see a de inverted or de inversion coming into the yields scur so that's going to be a very interesting thing to watch when that happens now now uh something really interesting um I'm going to go back in time because there is something really interesting happening which has um um kind of um um familiarity with what is happening right now so let's go back in time to 2007 so this is the uh yield curve chart let me actually should BL it up like this here we go so here the interesting thing is that we had actually the 2-year trasy note topping back in June of 2006 and then about a year later we had a secondary top come in and from a technical perspective this looks very similar to uh the kind of pattern that we have uh in the US strategy node today and I'll just go back to that a little bit later in the um towards the end of it and uh one of the really key things to watch is that um you know uh we had a low come in uh around December of 2006 a high in January 2007 uh then a low March 2007 and then a high back into June of 2007 right at the 78.6% retracement of these highs from June of 2006 and then the 1.27 to expansion also nearby uh and of course uh the 2-year was yielding uh at this stage a little over 5% which has also been the case uh recently and then the really interesting thing to watch is that what happens when the actually the rates uh or the yields began to move lower we got to a point where it was testing these lows from back of March 207 and then here is um perhaps there might have been a chatter about the red Cuts coming in or whatever uh at that time we began to see perhaps from the support coming in from this region as well a slight spike in the yields but that was just shortlived and after that uh the market actually took these lows out so this is just taking out the triple lows uh these lows the lows from March 2007 the lows from December 2006 and an accelerated move lower in yields for the 2-year and then uh the actual rate cut happened in 18th of September I believe was around 18th of September 2007 that was the first rate cut uh and then what we saw was actually the stock market um kind of ried during this period and then finally the markets uh which is the S&P 500 and DOW Jones and I think the NASDAQ topped a little bit later but they they topped in the early part of October 2007 so that's really interesting it's there's a lot of um uh analogy with what the uh interest rate markets are doing uh right now on the two-year Trad node the only caveat is that this is also an election year so this is really interesting so just wanted to uh put this out here and show you guys um now if we just move to the current period and try to make this analogy here um here we go so what we have seen is basically a high which came in October of 2023 and I secondary high coming in April um and then the market has gone and um retested these lows around this region and kind of it's finding support here so I think the the key takeaway we can take is from that analogy that um you know if the yields kind of slightly rise but then if they're able to take these lows out and begin to decelerate um really quickly that's going to be uh an indicator that the uh the the interest rate markets they are telling us that okay um a perhaps a further or a stronger rate cut is needed what do I mean by that at the moment the market is kind of pricing in um about 50 basis point um it's kind of expected from the FED in the month of September now the FED also said that actually they are data dependent and during that period if the data uh on the inflation basis or on the jobs basis unemployment basis uh is stronger then perhaps they might do a smaller uh rate cut which is 25 basis point for example in my opinion the markets might not like that uh and then U you know we could have a fair amount of volatility in the markets um and then if the in my opinion the FED actually goes and as not 50% but 75 basis point so not 50 basis point with 75 that could also be perceived that maybe economically things are actually quite bad and that's why the Federal Reserve has gone and uh done a large than what an expected rate cut so that those that kind of scenario actually might trigger some sort of U um uh fear from an economic perspective and uh create fair amount of volatility so that's a possibility um so we'll have to wait and see what sort of R cut we could get um but the markets are sort of in the way pricing in a 50 basis point um 25 basis point might be too less 75 might be too much at this stage we'll have to wait and see so the clue that we'll get is actually how the this Market when it breaks uh this lows U how what sort of accelerated move we could see to the downside and that the bond markets will be telling us quite a lot um about it now um what we can also do is um um while we are at it take a look at uh the uh stock markets going back to 2007 uh so here we go let's take a look at the Dow Jones Industrial and I'm going to move over to uh the July 207 so here um let me actually move this to candles just a little bit easier to see um so here what we can see is we had 17th of July there was a uh top right here and then the market moved lower it moved lower quite a bit uh so that was like the first down draft and here we go that was about 10.7% in the Dow Jones cash index and then Market made actually a full recovery of it and went actually slightly higher but during this time we also had a rate cut so perhaps the expectation of the rate cut and rate cut and actually getting a rate cut um might actually have led the market higher um and then finally we saw actually a top being put in and then of course we knew that that was the beginning of the great financial crisis um and then if we take a look at this on the S&P 500 here we go and I'm going to actually go back in time here we go and here we go so what we can see is that um the first time 7th of July we had a Top com in the market actually uh dropped uh um about nearly 12% perfect ABCD pattern um and we have had an ABCD pattern recently as well we'll just evaluate this and then um the market recovered and topped uh 10th of October 2007 U so that's an interesting thing um there is some similarity to the kind of price action we have seen of course different kind of fundamentals um and also it's an election year so there is some differences there and then if we take a look at the NASDAQ so this is the um NASDAQ and here okay I have to go back in time let me just go back in time a cash index of NASDAQ 100 and now this index was slightly different one of the things about this index was that actually completed this big ABCD so that's their entire uh bull market starting in uh you know October of 2002 and completing in this in November uh or shall I say towards the end of October 2007 so this index actually topped a little bit later on but we had several of these patterns completing around here we have this big ABCD 1.27 to extension of uh the this this leg around here and then um the first uh move down was about 11% 11.45% and then of course the bigger one the next like which came lower after these lows were taken out was about 25% so perhaps this was kind of an early warning but the difference the big difference which we see between the NASDAQ U and S&P 500 and also the Dow Jones is that those indices that actually topped uh around July and then they made a full recovery of the highs went slightly higher uh and that was the just the tnation of the wave and um you know was it was just a tnic wave and after that um in October early October those indices actually um topped so there we go and uh what we can actually take a look at now I've shown you a analogy from the interest rate side of things uh and uh also let's see from a stock indices perspective of what we are looking at right now uh so let's move in time so this is um okay I'm going to actually I'm going to move to the uh nqs and I'm going to take a look at this like this now this is the chart which we have seen several times this is the initial uh move lower uh in this cycle and here it's just gone and went down by about 177% um completed this big ABCD you know um and uh we were the recovery has been really really strong one of the key things is that actually the market um has gone above the 61.8% retracement on the futures um and I was actually thinking that we might see some resistance around here uh but the market has been much stronger so it's just gone above the 61.8% retracement uh let's take a look at this on the weekly chart so on the weekly chart what it did was it completed this big ABCD now this not the entire bull market bull market has been one of the greatest bull market in the stock market history uh uh or the recorded history uh but it did complete this big ABCD and after that we saw the 177% decline and now it's right into this danger zone of 61.8% 78.6% uh retracement so what is is key to note here is um that you know um I'm I'm I'm thinking that we will actually be in a sideways ranging market for quite some time and with our timing coming in towards the end of August beginning of September we could see a fair amount of volatile volatile time um and if these lows lows of 5th of um August they are actually taken out with the downside we could see Sharp moves to the downside because it would also mean that uh uh it will be breaking this uh trend line from uh this brown trend line shown here so it'll be actually breaking this trend of the CD leg uh and I I believe that we are actually in a a bigger degree um cycle correction so we could see the market actually move U further lower so this time it was uh 177% maybe 20 25% uh from top to the somewhere around here it could happen um but it all depends um you know well if the trend line is broken but there's going to be a start of something like the uh what we saw in the great financial crisis I'm not sure I don't think so uh but I do not know either will actually follow the technicals um there is some similarity to it I've shown you the two-year treasury note how um kind of the patterns um which are quite similar to uh which existed back in 2007 to what they are right now uh some of that um uh similarity also exists in the stock indices um but again the fundamentals are slightly different now so we'll be watching the technical so I'm expecting fair amount of volatility at least in the early part of uh September just because of the timing and where the market is so if the market gets um you know um is not able to make higher highs from here it is actually in a resistance Zone uh as we speak this is what the NASDAQ is and after the completion of this big ABCD I would expect you know um some good degree of Correction um so this is what we are watching in the NASDAQ uh now let's actually move to the SPX so we'll take a look at the cash index so this is the cash index here we do have a higher Target as well because of this ABCD now um what the market has done is it's just a fabulous recovery look at these three weeks it's just such so strong um now it's really important if the market is able to get above these highs of uh uh early July and then complete this ABCD uh which could actually see uh this um 61,000 so excuse me 6,100 um so that would be actually completing the kind of cycle we have seen in the NASDAQ but the markets are you know in different phases um so the really key thing is it it broke below this uh trend line then it was able to actually reclaim above of that so we'll have to adjust the trend line a little bit um and then the final big trend line is this one so uh again I'm expecting um fair amount of volatility um a lot of uh choppiness uh up and down uh in this trading range so I'm expecting more of a trading range Behavior Uh for now and there is a chance that by the end of the um end of the year we might be uh we might be actually be able to complete this big ABCD NASDAQ a little bit different story but I think we are going to see a really uh choppy period a lot of volatility in the stock indices and then we'll be watching the interest rate markets really really carefully um to get Clues uh you know how what they are telling us and if we see um you know uh yields Rising higher um then that's going to be an indication that okay uh pressure will come in the stock indices as well uh on on the E mini here we go um this is the Futures here fantastic recovery it's not far away from the new highs actually so it's actually might be able to take these out quite soon perhaps and then we have um uh the big ABCD around 6100 as well uh but I would expect fair amount of um uh choppiness in the market um so this 5th of August low is really really important if that is taken out then we are looking at ABCD to the downside um now let's take a look at the ym which is going to be the um Dow Jones Industrial Futures here of course these look um very strong as well it shows a different pattern because the ABCD is much higher so the chances are if able to get above this 42,000 then I think it's really shooting for this big ABCD um but you know uh we could see fair amount of choppiness um and it might remain in this trading range for quite some time and then is eventually able to get out of it and the really interesting one is the Russell 2000 because this is the one which has you know really um being in a sideways ranging Market because of higher interest rates and now the when the interest rates are finally will begin to move lower as indicated by the FED uh chairman um we are seeing a fair amount of strength coming in so this also shows there's a rotational aspect in the in the market where we could see different indices do different things some of the indices might show a topping Behavior as the NASDAQ 100 uh and the others might show a catching up face so really uh watching this uh uh Russell 2000 really really carefully um but really the chance Es are if it is able to break above this um 2300 then of course the it could it has a chance to make a new all-time high and then maybe even higher now something really interesting that uh we also took a look at which is the New York um Stock Exchange Composite Index this has about nearly 2,000 maybe 1,500 to 2,000 stocks including adrs um and then it's showing really strong strength on the weekly ch um so it's gone above our Target of 1.27 to expansion so looks like it's going for 19,90 which is the 1.618 expansion whether it'll be able to do this big ABCD I do not know um but that ABCD Still Remains there but I think that uh uh this 20,000 Mark might prove a fair amount of resistance um in the in the uh stock the stock uh index um because month of September it could involve fair amount of volatility in my opinion of course we'll have to wait and see uh and then uh let's take a look at the gold market um here we go so the gold markets the weekly chart it did something really interesting so we had um shorter term Target of about 2500 and above that the 1.618 comes around 25 76 so the market pretty much reached that so the gold market is actually drifting higher and we have a really really key resistance level or in other words Target at 2700 and Beyond 2700 psychological 3,000 um so in my opinion the the gold market is likely to drift higher but it might not be a Sprint higher or it could be just to 2700 and we might end end uh enter into fairly Cho um a choppy period for gold and maybe a little bit of a pullback so here um I think I will just expect some sort of a trading range the gold is pretty volatile uh at the moment just because it's hitting our 1.618 expansion um extension level actually right here so that's the 1.618 uh extension of this a swing from point c um longer term this is the monthly chart we can see the big ABC the pattern around 2700 roughly there we go um that might prove to be a fair amount of resistance as well um and what we can perhaps expect is some sort of a pullback of few hundred points at least so this is what we are looking at the uh in the gold market so I think I've covered um uh did it in a different format to what um we normally do but um you know I just wanted to point out there is some sort of uh um analogy with the 2007 uh period in terms of how the rates were moving back then because uh there was a paradigm of higher interest rates and then that Paradigm was actually broken um and then when they fed it was Ben benaki chairman uh back then he started to um lower the interest rate but I think he was a little bit U slower in doing that and then of course uh um no one knew but at that time was the start of the great financial crisis but of course um there has there have been a lot of learnings from that period um the Federal Reserve has got additional tools such as quantitative easing now uh which did not exist back then and then of course the FED also has a lot of room to actually move the interest rates lower quite a lot uh before actually using some of those extraordinary tools so um it could be a different this time but there is a fair amount of similarity between uh that period and uh how the interest rate markets are uh behaving uh in terms of key patterns right now um and then of course this could have an implication on the stock indices as well but again this time it could be different um so we'll of course be uh watching the technical patterns really really carefully and try to decipher what the markets are telling us where the price is likely to move next so thank you very much for watching the video good luck good trading and speak to you guys soon