The typical “Day Ahead” post includes charts and commentary for the S&P 500 Index (SPX), 30-year U.S. treasury bond futures, gold futures, Euro futures, crude oil futures, and the U.S. Dollar Index.
The S&P 500 was choppy as expected yesterday. Should see SPX start the day on the back foot today but doubt it is very long lasting as it should open not far from support at 2698. Should firm up there and rise into tomorrow.
The S&P 500 stayed on track yesterday and filled the gap to the March 21st close. There may be a small stutter step this morning but think there should be more upside left in the swing up from April 13th. 2703 and 2697 SPX are supports for the morning.
The game plan for the SPX remains the same as yesterday, grind higher to at least the 2712-2715 area if not 2733 before much of a consolidation.
We will see if the S&P 500 can finally break over the April 5th and March 5th swing highs today. They tried early last Friday but was not able to sustain it. By the look of the futures as I type, SPX will likely open near 2672. Once over 2672, play for at least 2688 but by that point they should push for 2712 to 2715 SPX.
The good news is that the S&P 500 is attempting to rise, the bad news is that it is still having trouble pushing over the March 27th and April 5th swing highs. Still think the next move of note should be to break over those highs and fill the March 21st gap. As I type, futures are pushing past the high of yesterday so odds look good for a gap up day. If the open is over 2679, don't fight the rise, go with it and aim for at least 2698. If just under or at 2679 SPX, there is a chance of a small consolidation before pushing past.
The S&P 500 has been consolidating in a relatively narrow range for the past two days just under April 5th high and around the daily 20 EMA. Bearish market participants have not been able to push lower in any meaningful way against that resist and it is not like they couldn't find an excuse to do so with the news headline over the last few days. I read that inability to push lower as bullish but can't argue with the idea of letting the market move up out of the range before taking a position.
The S&P 500 managed to fill the April 5th gap yesterday but couldn't advance past which makes sense considering that the FOMC minutes will be released later today at 14:00. Equity futures pulled back from that area overnight and should cause the SPX to open near 2632 this morning. It would not be unusual for the market to be under some pressure this morning, perhaps even testing 2622 but by late morning should stabilize and even bounce a bit before 14:00. If the FOMC minutes don't sound too hawkish, the rally should push past the recent highs and work on filling the next overhead gap. If is sounds like the Fed is planning to be very aggressive in raising rates, then a push toward 2584 SPX and lower to 2573 SPX is on the table for late today and early tomorrow.
The S&P 500 held to the general forecast though with somewhat exaggerated moves up in the morning and lower in the afternoon. Today I think the goal will be to attempt to fill the gap from April 5th but not put much stress on that high before the FOMC minutes tomorrow afternoon. The open should be between 2637 and 2644 and a positive bias till either 2653 or 2665 is tested.
The S&P 500 should aim for at least 2619 if not 2628 today before running into much of a headwind, even 2640 SPX would not be shocking. After 2628 or so is tested, a modest correction is possible but think it more sideways than down.
Equity futures sold off a bit last night on increased tariff rhetoric and stabilized early this morning. So far the reaction to the NFP in equity futures has been pretty mild, bouncing up from the early morning lows. Bonds, gold, and Euro all tested 240 minute 20 EMAs and attempted to push down from them. Don't know if that will persist through the rest of the day. Back to S&P 500, I expect it to spend the day trying to fill the overhead gap that we will have this morning.
Bigger picture I have been trying to identify what I think should be a (iv)'th wave low in the S&P 500. Yesterday I thought the pattern would look best with one more little low but that idea was invalidated early in the morning when the market couldn't use 2586 as resist once 2577 was tested. I suppose this could technically still be a fourth wave but looks too large relative to the rest of the formation. To really end this discussion of whether a new low is still viable or not we need to see SPX over the March 29th swing high. Almost made it yesterday, and by looking at the futures, should open just over it this morning. There may be a pause near 2662 SPX but favor higher as long as 2639 SPX holds as support. If they begin to grind over 2662 SPX, be open to a rise to 2691 SPX.
Yesterday, the S&P 500 came through with the expected move higher to test 2621 but needed another thrust up overnight or early this morning to definitively mark a low being set. The problem is that the futures are down this morning taking that off the table. Now what? Well, the whole move between March 23rd to the close yesterday is made up of a set of three wave moves suggesting that the wave iv, in teal on the chart below, had become more complex. That means a new low should be on tap today or tomorrow.
So much for the idea of a truncated low. Yesterday the market elected the alternate path and sold down from the Thursday high and went on to make a new low under that of March 25rd. So that means we have a new candidate for 'c of (iv)' at the low yesterday. The alternate to wave (iv) being set is that wave 'v of c of (iv)' extends which I am not a fan of at the moment. First objective today should be to test 2587 to 2595 SPX area. As long as any retrace there is constrained, I think they will eventually grind over, perhaps late in the day today.
Working hypothesis is that the wave (iv) correction in the S&P 500 ended on a truncation last Wednesday and are in the early stages of wave (v) up. That said, a modest correction to retest the break over the downward channel is reasonable today before resuming the climb higher. Supports to watch are 2633, 2626, and 2616 SPX. Under 2616 SPX, the odds that wave (iv) has not been set increase and the market becomes vulnerable to a new swing low.
The S&P 500 did drift somewhat lower from resist yesterday but did not make it to a new low. A new low would certainly improve the short term pattern but I can't get too bearish at this point as 2593 SPX is holding. The day before a three day weekend is often positive making today difficult. I'd like to see a poke lower and reverse up in the morning but perhaps they remain trapped sideways today and spike lower Monday.
The S&P 500 was stubborn yesterday morning but finally yielded in the afternoon. Today a small consolidation in the morning makes sense after which we will see if SPX can make a modest new low to that of last week.
Yesterday played out more or less as expected with the a retrace lower in the morning and rise from support. There was a wrinkle around middle of the day as to whether there would be a weak attempt to test that support again or coninue rising but that can't be helped. Odds of one more low in the S&P 500 to set wave (iv) are still alive but it is important for bears to step in today between 2668 and 2672 SPX.
The S&P 500 is due for a bounce or consolidation at a minimum and may even have made a more substantive low last week. Primary view is that after a few days of sideways to higher, the market will dip to a slight new low to complete a wave (iv) and rise into late summer or early autumn. The day session open will probably be just under 2637 SPX. At some point today they should attempt to push lower from resist but not expecting a new low from it.
Prefer a new S&P 500 day session low today around 2631 or 2613 SPX. I expect trading to be more of a back and forth affair today as futures have already tested reasonable supports last night.
There was an initial spike up on the FOMC statement by the S&P 500 but was faded. The futures moved lower overnight to test the Monday low suggesting a gap on the day session open. Best if they not try very hard to fill that gap an trend lower. Once under 2698 SPX, bears want to keep the pressure on and aim for at least 2672 SPX before much of a bounce attempt.
The main event for the day is the FOMC rate decision at 14:00 with the press conference at 14:30. Expect most markets to be pretty dull till the announcement. One exception may be crude which has the EIA number out at 10:30.
The S&P 500 moved lower as expected yesterday but a bit more than I thought originally. This means that it is more likely that we are in the second impulse down from the lower high set on March 13th. That said, we will probably start the day today with a small bounce up into the 2721 to 2726 SPX range before selling pressure comes in to attempt a new low under that of yesterday.
With the S&P 500 futures starting off lower early this morning and likely a gap down in SPX under 2744 on the open, the idea of one last wave up for 'b of (iv)' is dead. Instead, we are in the early stages of 'c of (iv)' down. There is a decent chance that the low for the day was set in futures and the rest of the day is spent working to fill the gap from last Friday.
The idea of one last swing high in 'b of (iv)' is under stress but is viable as long as 2744 SPX holds. The alternate is that 'b of (iv)' was set at the March 13th high and now in the first leg of 'c of (v)'. Even if it is for a lower high, I thing there will be a move up into middle of next week.
The S&P 500 is putting stress on the idea of getting one last swing high for 'b of (iv)' into the FOMC meeting but is still alive. It is important that they rise today or will switch to the alternate where 'b of (iv)' was set on March 13th and any move up into next week will only be a bounce to form a lower high. The key hurdle to overcome this morning is 2762 SPX. If they can push over that, 2772 or 2780 SPX are in play today. On the other hand, if 2762 holds as resist, aim for 2729 SPX before much of a bounce.
Yesterday started out as expected by pushing up for a new high over that of Monday but did surprise by stalling short of targets. Main hypothesis is that was a third wave high up from the low from March 2nd and had the first wave of a fourth wave down into the close. Today should see a push into at least 2786 SPX late in the day in a small 'b' wave. Since the FOMC meeting is next week, I am expecting prices to travel net sideways the rest of the week in a triangle. Other options for the fourth wave are possible but this is the one the uses up the most time hence why I think it is the best fit.
The S&P 500 drifted back just a bit yesterday in a slight correction. Technically that can continue today dropping back to test 2769 SPX though I think that unlikely. Instead I posit an advance to at least 2809 before another corrective formation. Overall think the market is attempting to keep the wheels on till the next FOMC meeting which is March 21st.
Let me start the day with backing up a bit and looking at the weekly S&P 500.
The NFP numbers are out and look good, taking equity futures higher and put a little pressure on the Euro, both of which are in line with forecast. The S&P 500 should open over 2346 which implies smooth sailing to at least 2760 if not 2773. Don't be in a hurry to fade either number as the alternate count calling for a new high over that of February 27th is viable.
Expect a push to a new high on the week in the S&P 500 today. Think there is a good chance to reach 2746 or 2760 SPX by tomorrow morning or early next week. Remember, equity futures roll to June today.
(Public posts are included on this page too.)
I did a little work on the big picture in the QQQ's, the ETF for the Nasdaq 100 index, today so that is a good starting off point for this review of the big picture for this week.
US equity indices gave back gains made in the first part of last week at the end on increased tariff rhetoric but held above important areas. I know that it may be frustrating that I am not on the sky is falling bandwagon but I still think there is a good chance that the wave (iv) correction ended and we start a rise from this area for a couple months. Don't get me wrong, I think the market is headed for some very turbulent times but I don't think we have seen the high yet. We will see if they can hold steady at the start of the week and not be shocked by the FOMC minutes Wednesday afternoon. Let's start off with a bonus chart of sorts, a weekly chart of the ETF for the Russell 2000, IWM. It is resting on the top of the wave (iv) target area now and has the adaptive CCI positioned at a zero line test.
Two ways a decline might play out
4th wave correction nearly complete
The S&P 500 held important support last week from both a typical 'c' wave target and a trend line that has proven to be important over the last couple years. If that area holds till the NFP on Friday, the odds that wave 'c of (iv)' has been set go way up. One thing of interest on the weekly chart below is that the adaptive CCI is nearing zero after an extended time above it, which is typical fourth wave behavior.
The 'c of (iv)' in the US equity indexes is well underway and can complete in the holiday shortened week.
The main event for news this week is the FOMC rate decision on Wednesday at 14:00 followed by the press conference at 14:30. It is typical for the equity markets to rise into the FOMC meetings thus that will be the main game plan going into middle of the week. It is possible that the 'b of (iv)' has been set in SPX last week but still think we see a modest high over that of last week.
I was working on the ETF that tracks crude oil, (USO), and have decided to promote what I had as an alternate count in crude to the primary, that there is one more high needed to complete a five wave sequence up from the low from last year.
The main hypothesis is that the DX rise up from 2008 is not yet complete and can accommodate at least one more high over that of the 2017 high. Why do I push back on the idea of a DX high being in and the first impulse down complete or nearly so? Two reasons. One, the move up from the May 2016 low does not look like a well formed impulse but more like a three which is more consistent with a (b) wave high. Two, both monthly and weekly cycles suggest a pretty significant low and a into 2019-2020. I'll even add a third, that the correction from 2012 to 2014 lasted 22 months, and the correction from the 2015 high marked [iii], to the low last months was 35 months, about as close as you can get to 1.618 expansion in time as you can get thus having price and time pointing to a significant low.
The British Pound ETF (FXB) is assumed to be forming a wave [iv] like most of the major USD crosses. The move up from the early 2017 low has stalled against a possible wave [iv] target but has not quite pushed low enough to break the uptrend.
It is normal that the recent rise is slowing as previous highs are tested but do think we should at least see the channel tested on the monthly chart, around 3.27%, or the first fib extension up at 3.35% is tested before much of a retrace.
Since there are elections coming up this weekend in Italy, thought it would be a good time to update the big picture charts for this ETF. I have interest in it as it has formed a classic triangle from the 2009 low and may have completed at the start of this year. I also think it can turn into a canary in the mine, a harbinger for the future.
An overall bullish expectation with some targets to watch
As a continuation of the post yesterday taking a look at the big picture, here is much the same but using the ETF for the Russell 2000 (IWM). The idea expressed here is the same, that we are now in wave (iv) of [v] up from the 2009 low. Expect at least a few months of mostly sideways price action before a push to a new high.
Quite a week in the equity indices last week. Is the end upon us? As you know, my view is no, that we have been expecting a wave (iii) high in the advance up from early 2016 and now should be forming a several month corrective pattern for wave (iv) before an eventual top that should end both the advance from 2016 but also the rise form the 2009 low.
The primary hypothesis in Crude is that the 2017 low was a truncated low and that we are now seeing the first move up out of that low. The next move should be a corrective move lower that last at least until May if not continue into October.
Here's a quick reference for Bradley siderograph inflection dates and gaps up in the Dow and SPX
In the big picture, either a high is being set soon that results in a significant retrace lower or gold will make a run for mid 1400's if not 1500. Gold has mostly been range bound for the most part of last year and as such I don't see that as terribly bullish. USD has been weak the last year against most crosses and this is the best gold can do?
Bonds are staying on track with the primary forecast of a breakdown out of the ending diagonal that finished in 2016. Best if price pushes under the March 2017 low before much of a bounce.
Both scenarios suggest bullish opportunities in coming months
With the USD weakness that we have being seeing over the past few weeks, it is a good time to update the monthly and weekly charts on both the main and alternate EW counts on a popular ETF for USD, (UUP).
Bearish scenario still in the lead
Price is putting stress on a supportive trend line, forcing a squeeze between support and resistance.
Here’s a compilation of the open gaps in the S&P 500 and the Dow 30 since last September.
Since I just updated the DX monthly and weekly charts, thought I would plough ahead and update the ETF UUP as well. Same story, expect a wave (iv) has been set and looking for a new high over that of the early 2017 high in the next 18-24 months.
Just refreshing the long term charts on the Dollar Index (DX). The forecast is unchanged in that I think that that the Dollar has at least one last high left in it over the next two years.
Right now the bearish case looks best
UNG, the ETF that tracks natural gas, has elected to take the alternate path from when I last posted these charts by pushing to a new low under that of the 2016 low. The dominant cycle has shifted a...
I've been asked for an update on GBP and since the equity indices should quiet down over the next 1.5 hours till the FOMC statement, think I have enough time to get this done. Overall think GBP, like many of the major USD crosses, has spent the last year correcting up in a wave [iv] and should be close to pressing lower in a wave [v] over the next 18 months.
Catching this decline and bounce in stocks might be easier than trading the metal itself.
I have included charts of this ETF, GDX, in the last couple of gold posts and thought I should make a separate post on it for completeness sake. The main hypothesis shown on the following monthly and weekly charts is pretty similar to that of gold except that I am assuming an ending diagonal here as opposed to a simple impulse lower essentially allowing for a couple retests of the of the early 2016 low before a climb out of the hole.
Signs that this triangle pattern can break downward
The wave count that I last had on the big picture in gold just didn't sit well with me and have put some thought into it over the weekend. The overall main and alternate ideas in general are the same, it is more of just a technical wave counting issue.
I find the iShares MSCI Italy ETF interesting for two reasons. One, so far, it is a textbook example of a triangle formation that has spanned nearly nine years. Two, if the triangle pattern holds and the Italian markets turn down, could that be a precursor to other European equity markets topping and even mark a turning point in the Euro? I don't know if the triangle pattern will hold or if it will be an early warning to other problems on the continent, but it does look like a trading opportunity is nearby.
Happy Thanksgiving! I thought I would see if I can sneak in a little analysis before slipping into a turkey induced coma.
We think it's time for the downward trend to resume
A sizable correction is due
I went ahead and did the copper analysis for the respective ETN. I've added some additional chart geometry and the Wave 59 9-5 study to the monthly chart but otherwise the story is the same as for copper futures.
Up until the middle of next last month, I had been treating the rise in copper as a deep wave four but I am promoting the alternate to primary, an initial impulse up from the early 2016 low. That does not mean that I changed my mind about this advance ending, but that I have thrown in the towel on expecting a new low on a turn lower.
I have been putting off a bigger picture gold post as I have been reevaluating the big picture EW counts. Let me start with the two scenarios I had been using and move on from there.
The bond charts look favorable for a move lower into next year. The alternate is that the wave (ii) is not yet finished though it is becoming a more distant possibility.
The outlook for UNG has not changed over the last few months. It has failed to rally much but then hasn't fallen either. Still favor a bounce that can test the highs from last year.
As you would expect, the analysis here is very similar to that done on bond futures earlier. This looks like a wave (ii) bounce though it is too early to rule out another test of overhead resistance.
The major theme in bonds for the last six months has been that we are in a wave (ii) bounce after the first major impulse down from the 2016 high. A break of the low of last month should be the first major confirmation that bonds are ready to turn down.
The index can climb still higher after a modest correction
The theme from when I posted these remains the same from about a week ago. I just added the next steps up in the charts to keep an I on.
The Russell 2000 is in a similar position as most of the other major indices. Probably in wave (iii) of [v] up from the 2009 low. This implies one more down/up move before any serious correction sets in.
Counting an Elliott fourth wave in the upward progression
To my eye, grains are in an ending diagonal or wedge in the latter stages of its development. Let us start with the ETN JJG which I think has the same ending diagonal form as wheat and corn but where a wedge is easier to see.
Updated weekly chart but very little change from the earlier post here which you should read as a reminder of the possibilities. The most noteworthy difference is that the cycle detection is focusing on a shorter cycle which has the ideal low at the end of September.