The typical Daily Update includes charts and forecasts for the S&P 500, Dollar Index, Euro futures, 30-year bond futures, crude oil futures, and gold futures.
The S&P 500 is putting stress on the idea of the lower degree fourth wave but still alive. We probably get 2748 to 2745 SPX tested early this morning. Under that area, I will probably be forced to change my EW count to either consider this decline as part of a larger fourth or perhaps a wave two. Will deal those possibilities after we see how they deal with support today.
With the drop overnight in the S&P 500 futures of about 20 points, I have to at least entertain the idea that wave iii completed last week and that we are now in a wave iv correction. The previous idea, that of a lower degree fourth wave is still possible as long as prices turn up from no lower than 2745 SPX. Under that point, the larger fourth is probably in its first wave lower.
The S&P 500 spent yesterday in low volatility formation that, with hindsight, was probably the middle of the fourth wave we have been looking for. The S&P 500 E-mini futures dropped overnight in what is probably the last leg of the fourth. I lean toward the idea that the current futures low holds but can imagine the zone is tested early this morning before lifting throughout the day today.
I jumped the gun yesterday advancing my short term wave count since the market only went on to make a slight new high before retracing. So, back to the idea of looking for a relatively minor fourth wave and a rise out of it to at least challenge the May 13th in the S&P 500 and even make a try at filling the overhead gap at 2822. The S&P 500 E-mini futures made a small dip overnight and have been rallying as I type suggesting the low may have been set this morning before the cash open.
The market is likely to continue to bide time till this afternoon when the FOMC makes their decision known on whether they will hike rates. Keep in mind that the statement at 14:00 will be followed by a press conference at 14:30 which has a Q&A component that usually begins around 14:40-14:45 so there is a possibility of more than one headline shock. I've advance my short term wave count a little, promoting an intraday alternate to main, where we are now due for the last leg up in wave iii. I posit that the S&P 500 is primed to like the FOMC decision today, whether that is to not hike this time or go ahead with a hike but with language that dials back the pace of future hikes.
One major event for the week passed. Next is the FOMC rate decision and press conference tomorrow afternoon. Plan for today is similar to yesterday, overall think the S&P 500 holds up pretty well but can use a consolidation pattern. Ideal would be a minor new high today to yesterday followed by spending the rest of today and tomorrow morning running sideways. The alternate hypothesis is we don't get a minor new high and the consolidation has already started.
Expect today to be choppy and relatively range bound in the S&P 500 since the big news items are tomorrow through Thursday morning. It would be nice to see a test of 2786 today before trading sideways for a day or two.
I still favor a new high over that of yesterday before going into a more involved correction in the S&P 500. That said, if 2761 SPX fails to hold this morning, allow for a test of 2750 before another major rally attempt.
The S&P 500 is staying on track with the main theme of higher into middle of the month. The main target for yesterday, 2768 SPX, was hit and surpassed late in the day. Today, 2775 SPX may prove to be a short term roadblock though the next main target zone is higher at 2786 SPX. The equity futures roll to September today, making this a good candidate for a consolidation day.
The way to 2768 SPX should now be clear. The main theme is to use this period before the major news events next week to put as much pressure on the March 13th swing high as possible.