What charts suggest for August: Yamada
A new structural bull market is appearing in chart analysis of the S&P 500, technician Louise Yamada said Tuesday.
"Generally when you see something like that after a structural bear market, you could call it a new structural bull market," she said. "There's always the caveat that it's Fed-led, so to speak, and whether or not we can sustain that is another question."
Stocks closed lower, with the Dow Jones Industrial Average losing 93.39 points to finish at 15,518.74. The S&P 500 declined 9.77 points to settle at 1,697.37, while the Nasdaq fell 27.18 points to end at 3,665.77, snapping a five-day win streak.
On CNBC's "Fast Money," Yamada said that she didn't see much movement in the near term.
"Right now I think August is probably a quiet month," she added. "We could see a pull-back here. There's some minor divergences coming in, but I think you see maybe a 10 percent trading range above the 1,560 where we broke out through the 2007 peak."
Yamada said that she remained "constructive unless the June lows break."
The June lows in the S&P 500, which represent a pull-back of approximately 10 percent from current levels, were crucial, she added.
"If we were to see consolidation above that break-out level, you could have a series of 10 percent pull-backs and move up maybe later into the fall," Yamada said. "And then if we see more divergences, we'd become a little bit more concerned."
Turning to 10-year U.S. Treasury yields, Yamada noted a technical reversal in the charts.
"This is very interesting because structural bear markets for interest rates have run 22 to 37 years, and generally the reversals from falling-rate cycles to rising-rate cycles are very slow, multi-year affairs, which is exactly what we're getting here over a two-year period," she said.
Breaking a 2007 downtrend was the first step, which occurred around 2.41 and would result in higher interest rates.
If you go through 2.71, then I think we see 3 percent, ultimately 3.50, and you get a large amount of resistance coming in right here around 4 percent, as you can see.
Asked for a reason for why interest rates would rise, Yamada said that as the Federal Reserve begins to taper its $85 billion-per-month of bond purchases, the answer would become evident.
Yamada also examined the chart in a precious metal.
"Gold is still in a bear market," she said. "There's no question about it."
Yamada noted that gold had rallied right to the point of technical resistance, adding that prices halted "right at the declining short-term downtrend and also the 50-day moving average, so I think maybe now we're due to come down and test the low again."
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Yamada said that calls for a double-bottom had not yet materialized.
"We don't know that until it either holds or breaks," she added.