Here is the final update for our forecast for a turning point in BP at the end of June 2010. The forecast was based on BP’s historical reaction to eclipses and the MarketWarrior indicator Horoscope Index. Eclipses usually occur in pairs and BP often has a tuning point near one of the two eclipses. On the chart below, the two dots mark eclipses, one of the eclipses is identified by the letter A. In the subchart the BP horoscope index moves above the top boundary in late June. This is identified by the letter B. Both of these were used to forecast a turning point in late June 2010. You can see on this chart a bottom occurred late June and then July was an upward month.
Here are two more daily charts that I found when scanning the S&P500 stocks for the Gartley pattern. The first chart is for Xcel Energy (XEL). The Gartley Bearish Butterfly pattern has just completed. This pattern now indicates a decline should occur. The three price targets for the decline are the previous points B, C and A that were used to make the pattern.
The next chart shows another stock in the same situation. This is Wisconsin Energy (WEC). The Gartley pattern has just competed and now indicates a decline. The decline price levels are marked on this chart as 1st Target, 2nd Target and 3rd Target.
I used the MarketWarrior scanner to look through the S&P500 stocks for some Gartley Patterns on the daily charts. The first chart below shows the daily stock for Altera Inc. (ALTR). This stock has completed a Bearish Butterfly Pattern. After this pattern occurs, the previous pivot points B, C and A become the three next price targets for a decline.
Here is a second chart that shows a stock in the same situation. The stock is Xilinx Inc (XLNX). This stock has just finished the Gartley pattern. Now there should be a decline. The price targets for the decline are the previous pivots B, C and A.
Here is my 60 minute chart showing yesterday’s trading on the option expiration day. It was July 27 when the August option expired. I know from previous option expiration dates that this had a good chance to be a large range day. If you look back at the previous post, I thought this might be an up day. Instead the market moved down from the open and was a large 2% decline in gold.
The next three options expiration dates for gold are August 26, September 27, October 26 but these are all for low volume, low open interest contracts. So I do not know if their expiration will cause any movement in the gold market.
There is a pattern forming on the Gold 60 minute chart. The pattern has two parts. The first part is two bottoms with the second bottom being lower. The second part of the pattern in a strong move up after the second bottom. The pattern occurred on the chart below at points A and B. This pattern seems to be forming again. At point C we have two bottoms with the second bottom being lower. Now to complete this pattern we need a strong rally tomorrow. This would be the third time in a row this pattern occurred. We will find out if it occurs after tomorrow’s trading is complete.
Next week is the last week of July 2010, running from July 26 to July 30. The current active futures contract is the August 2010 contract. Next Tuesday, July 27, the August gold option expires and on Friday, July 30, the August futures contract has its first notice day. The dates just before the option expiration and the day of option expiration often see volatile trading. A Similar volatility sometimes occurs around the first notice day of the most traded futures contract. Around the first notice, day traders will close out their positions in the August 2010 contract and will open new a position in the December 2010 futures contract. This should create an exciting period of trading next week.
On the first chart below, I have added the Horoscope index using the Gold natal date. This is a 60 minute chart. I have added two blue arrow identifying where the Horoscope Index moves down to the lower boundary on the Horoscope Index. This indicates the gold market should have a Change In Trend (CIT) at these points. These points are on Monday, July 26 – one day before the gold option expiration.
Gold Next Week #1
The next chart shows the 60 minute chart covering next week from Monday, July 26 to Friday, July 30. The blue arrows on this chart identify when the Horoscope Index moves down to the lower boundary. This occurs on Monday the 26th, Wednesday the 28th and Friday the 30th and should cause a CIT. The August gold option is labeled on this chart on July 27 and the futures first notice day is labeled on July 30th.
Next Week Gold #2
The next gold chart is a 20 minute gold chart for the August contract. The last day on this chart is Friday, July 23. On this chart I have added my Short Term Delta (STD) count for gold. On Friday there was a #1 count pivot but, this occurred after the market closed for the weekend. This means the effect of the #1 pivot should occur on Monday, July 26th.
Gold Next Week #3
Below is our final chart. This is a daily gold chart. On this chart I have again added the horoscope index. The Horoscope Index moves below the lower boundary in the first week of August. At this time the traders will be switching out of the August contract to the next most active contract.
Here is another example of Gann’s 1×1 Lines. In this example I am again using the mini S&P500 (ES). The chart below shows a 15 minute chart with MarketWarrior’s automatic Gann 1×1 lines applied to the chart. The price step per bar is 0.25. This is the same price step used for the charts fixed price time scale. The price step for the 1×1 line and the price chart should always be the same. So if you use a 0.5 price step for the chart then you need to change the price step for the 1×1 lines to 0.5.
On this chart I have added arrows and the numbers 1 to 5. These arrows identify where the market made a top or a bottom on one of the 1×1 lines. Notice points 1, 3 and 5 made a bottom and two tops on the set of two 1×1 lines. It is not uncommon to see a Gann 1×1 line identify more than one turning point. Notice at point 4, a bottom occurred where two lines crossed. This is an event which is common enough that you will see it on a regular basis.
I have been watching the automatic Gann 1×1 lines in a few markets on the 5 minute chart. I am using the MarketWarrior indicator named “Gann 1×1 Lines”. The chart below shows the 5 minute chart for the S&P500 mini contract symbol ES. I am using 0.25 for the Gann 1×1 angle’s price step. On this chart the lines are drawn automatically from the tops and bottoms. By observing the chart, you can see that a few tops and bottoms occurred on top the Gann 1×1 lines. The bottom at point #1 and the tops at points #2 and #3 occurred at Gann 1×1 lines.
Not all tops and bottoms occur on a 1×1 line. By watching the Gann 1×1 lines and a simple momentum indicator you can find a few good traders per day. In the next few postings I will show how using the automatic Gann 1×1 lines and some simple indicators can help any day trader make two to four traders per day.
Here is a follow-up on our postings for gold on July 14, 2010 and July 15, 2010. The first chart below shows the 20 minute gold chart where I forecast a Change In Trend (CIT) around the pivot #1 on the chart. You should look back at the July 14 posting to read this forecast. What I wrote in that forecast was that my Delta #1 point occurred late in the day and the effect may occur the following day July 15. This is exactly what happened. After my Delta #1 point the Gold 20 minute chart had a 20 dollar per ounce decline.
20 min chart forecast follow-up
In my blog post on July 15, 2010 I talked about the break down of the stop and reverse method due to a small high-low range on the 60 minute chart. I said in that post that I expected the market to either breakout upward or downward. As I expected the gold market 60 minute chart had a nice breakout. On July 16, 2010 the breakout to the down side occurred. The stop and reverse method should return to working normally until the next extremely small price range.
This is a follow-up for the forecast made in the July 13, 2010 post. In the July 13 posting I made a forecast for the S&P500 mini contract (ES) using the 20 minute chart. Please go back to that posting and read the forecast if you have not done so yet. I used my Short Term Delta (STD) count that I developed for the mini S&P500 to forecast an important pivot point around 11:00AM Central Time 12 noon Eastern Time on July 15, 2010. The chart below is the same chart from the July 13 post but now the data for July 15 has been filled in. You can see the Forecast Delta #1 point did in fact identify a significant bottom in the 20 minute mini S&P500 chart. Hopefully you read the July 13 forecast and were watching in real-time.