Weekly Forecast Report SP 500 Gold Oil Biotech and More

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This week in the SRP Forecast Report from The Market Analysts Group:

• Markets in bullish “3rd of a 3rd Wave” pattern
• Biotech setting up?
• Playing 3x leverage off behavioral patterns for big swing gains
• Oil in trouble?
• Gold in pullback, what to watch
• Copper could move soon?
• The VUZI Pop set up
• Swing Trade ideas

Back on July 4th we projected a rally to 2176 all time highs, and prior to that on May 9th we projected all time highs to 2160.  We have seen both targets hit in July which is a seasonably strong period for the markets.  We also projected a low for Gold at 1195-1205 back in late May and early June with 1440-1460 targets.  This week we update SP 500, Gold, Oil, Biotech and more in the Weekly Forecast Report:

SP 500- Major 3 and 3rd of a 3rd

Hitting all time highs at 2176 this past week, the SP 500 is in Major wave 3 up from 1810 Primary Wave 4 lows in February.  Brexit caused a final C wave pullback to 1991 and we had projected support at 2002 the prior weekend pre-collapse.  We closed at a closing low of 2000 that week and have been heading higher since.  Major Wave 3 is made up of 5 full waves from 1991.  We are in Wave 3 of 3. These are considered the most bullish in Elliott Wave Theory, and its why you have seen very little in the way of any pullbacks lately.  We have a 2191 pivot upon us, but potentially targets go quite a bit higher ahead:

Below we have  Weekly view and a Daily view with those Wave 3 labels clear…

To further emphasize that we are in a bullish Wave 3 in the markets, we can look at thePercentage of NYSE stocks over their 50 day moving average line. This chart below shows a 90% reading peak at Major wave 1 highs, a 29% low at Major 2 lows, and now as part of Major 3 we are back at 80%

Using Behavioral Patterns to hit 11-13% gains in a few days on LABU ETF

Biotech Update: XBI ETF sets up LABU ETF for fat gains

Human behavioral patterns are a foundation of our work at SRP. We focus almost exclusively on swing trades looking for sectors that are consolidating or bottoming out and then pushing money into them via ETF or Individual stocks at key inflection points.  This past week we did that for example with Biotech.  The sector has been under pressure but also consolidating sideways for a few  months in a running triangle pattern we have pointed out in weekly reports many times.  This past week we saw what looked liked an emerging breakout of that pattern.

We used the XBI ETF to set up a LABU 3x Leveraged ETF swing trade for SRP members. Our theory was XBI was about to turn up in a minor wave 3 to the upside, and therefore LABU would capture the leverage at 3 to 1.  We were right at XBI pulled back right after our alert and we advised SRP members to add more LABU from 30-32, the bottom was 31.40.  We hit 37 plus during the week and as of Fridays close we had sold 1/2 our position for 11-13% gains and held 1/2 long. XBI can climb quite a bit higher which will push LABU way up if we are right.

Note in the weekly XBI ETF chart below how the 10 week EMA Line held nicely for minor wave 2

Gold Update: 1440 still on tap, but first wave 2 corrects

We played the NUGT ETF weeks back for 25-30% gains in a few days around the Brexit Vote window, again another example of using Human Behavioral Patterns to extract swing trade gains from the markets.

We advised back in late May and early June that Gold was likely bottoming in an irregular ABC fashion from the 1287 prior highs. We felt that bottom would come in at 1195-1205 area on Spot Gold pricing. Gold bottomed at 1201 and then soared to 1360 before correcting, then testing the 1360 plus area again recently.  We still have our 1440-1460 Gold target we laid out on June 1st intact, and right now Gold is in a minor wave 2 pullback, so far a 38% Fibonacci retracement test at 1310 spot this past week. If that falls then 1270 may be on tap, but for now we think it may get some legs soon:

Oil Update: 44 area is key

Everyone is trying to figure out what is going on with Oil. There have been some volatile inventory reports and the current thinking is the refiners loaded up on Oil so they could refine and capture margins as oil was rising, but they overstocked. Now that is getting worked off a bit.  We had projected a C wave high at $52 months back and we hit 51.67. At that point we told SRP members and forecast readers to look for 45 to 47.80 for a D wave pullback.  Well, we have fallen below $45 a few times so Oil is on the ropes near term. See our chart below… some oil stocks are looking tempting but we are avoiding for now until we see a confirmed new uptrend.

Keep an eye on that 44.08 pricing which is the 34 week EMA line

To recap:

• Biotech may be re-emerging and at SRP we have 3 positions open in this area right now, all profitable.
• Oil needs to hold 44 area or 42 may be on deck, avoiding sector for now waiting for uptrend to confirm anew
• Gold is in a minor 2 pullback, if 1310 holds it could get on a run again, intermediate target 1440-1460. If 1310 falls watch for 1270.
• SP 500 should head to 2191 resistance soon
• Copper still in base trying to break north but not confirmed
• Markets are in a Bullish wave 3 of 3 pattern

Swing Trade Ideas: The VUZI POP and how we front ran it at SRP

Speaking of Behavioral Patterns, SRP members were alerted to get long VUZI on July 19th and adding in the 6.75-7.25 areas on dips. We dipped nicely to 7.22 area and then on Friday VUZI exploded upwards on massive volume and an 11% move. Now they are subject of a James Altucher write up and also Investors Business Daily mention this weekend. How did we know to get long prior to this big crowd pattern?  The 13 day consolidation, one of our favorites at SRP…. see below chart:

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Below is a list of stocks worth further review and frankly during a 3rd of a 3rd alot of stocks are worth review:

LGIH- On our list multiple times in the 30-31 area, now 34.82 and consolidating gains. Entry level single family home builder.

OLED- LED device designer for Flat Panel Display sector. 9 week base, Earnings due 8/4

MXL- On our list multiple times at $21.10 nearing a big breakout. Earnings due 8/8 on this RF, Analog, and Mixed Signal ICS manufacturer. PE ratio 14 with very strong growth of late

PLAY- Dave and Busters operates 81 restaurants in 30 states with eat, play , drink and watch. 7 week base with earnings due 8/6

MBLY- Mobile Eye is right in the middle of a major Automotive trend of driverless cars with driver assistance systems. 4 week ascending base pattern, earnings due Tuesday this week

IGT- International Game Technology emerging from 3.5 month wide base pattern. Broke out this past week on rising volume. PE ratio only 10 with 30% recent growth. Makes computerized gaming machines for casinos, but one might extrapolate they begin diversifying into Virtual Reality and more.

IIIN- Insteel benefiting from US restrictions on imported Steel

AMBA-  Re-emerging after a bear cycle from 129 highs to 30’s.  Could break north to the 60’s. Provider of chips for video and camera, GoPro and other emerging areas like Drones etc.

These are just a few of many ideas, best of luck with your trading ahead

Copper Update:

Copper may possible emerge from a long term Bear Cycle but this is not yet confirmed. However, worth watching as some big upside plays could emerge from this beat down sector if Copper can break to the upside out of this base we show below: