Although the Fed desires to raise rates in their upcoming meeting, the data coming through is too conflicted to provide such a move. While the 30 day Fed Funds futures are pricing in about a 75% chance of a 25 basis point rate hike, the analysis from a TD viewpoint for the 10 year Treasuries and the US Dollar Index are not supporting such a move yet. However, that can all change if they trade above certain key levels between now and the September 21st meeting. Consider first the CBOE 10 year Treasury Index (TNX). It is currently bouncing off the lows, but until it breaks out above 1.739% or 17.39 TDST Resistance Level, rates should remain choppy or even head for one more lower low where we could see a major bottom in interest rates.
For the UD Dollar Index (DXY, a TD Sell Setup is in the works for the DXY. If it can consistently trade above the 96.129 TDST Resistance Level, that will suggest the US Dollar is in escape velocity mode. With TD Sell Setup @8, and bumping under the TDST level, it is probable it will fail.
Now for something a bit more actionable. If the Fed remains fractured, expect the SPDR Gold ETF (GLD) to continue higher if the active TD Sell Setup can maintain the count, and break out above the TDST Resistance Level at 128.22. With a solid gap after completing a TD Buy Setup @9, the chances that GLD can break above the TDST level looks good.
For equity markets, there are no significant updates as the benchmark S&P 500 (SPX) is still wavering. Once again, although equity markets are free to trade lower, there is room for another higher high. Details below.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BULLISH
Neutral if SPX closes below 2168.50 on Tuesday, September 6, 2016.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL
Neutral until further notice
This is still the primary timeframe we are focused on. Both TD Sell Countdown and TD Combo Sell are still on the 12 count. Similar to last week, both TD Sell Countdown and TD Combo Sell can record simultaneous 13’s if the week closes with a print higher than 2184.05 and a high equal to 2193.81 or higher. If successful, it will be tougher for the market to push higher.
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Neutral if monthly SPX closes below 2096.96 on Friday, September 30, 2016.
The monthly SPX continues to roll despite the minor red candle last month. Any potential signs of trouble will be forewarned when a bearish price flip is recorded, similar to what happened on June 2015.