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.
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.