Morning & evening updates
We chart the S&P 500, crude oil, the Euro, Dollar Index, treasury bonds, and gold, typically with a morning and evening post for every trading day.
SPX is opening up this morning as they are running the stops over 3200. Next targets up are 3223 and 3232.
Bonds slipped a bit under 155^26 today but quickly recovered it. I think it smart to allow for a bounce to test 156^25 or 157^14 before resuming lower.
More of the same as yesterday in SPX. Waiting for a poke up to 3201 or 3207 before a possible reversal lower in a retrace.
The intraday form is not crystal clear, but at the daily time frame, this current drop in bonds looks like a small 'b' type wave hence why I am expecting a bounce to test 157^09 or 158^06 before dropping toward 154^30 or 153^26.
Bias remains higher in the S&P 500 to push for and probably poke just past 3200 before a reversal. Aim for 3201 or 3207 while above 3189.
While I think bonds will dip lower in January, a bounce is possible in the short term to retest the daily moving averages or 159^02 before pushing lower.
Bias is higher in SPX to 3201 or 3207 while above 3188. I don't think it sets any speed records. The rise could easily take all day.
Bonds dropped a bit from the daily moving averages today but I'm a little skeptical that it is ready to drop to a new swing low just yet. I can see it holding or even bouncing a bit before really pushing lower.
The S&P 500 is being drawn toward the round number of 3200 at this point. Some resistance at 3190 but I don't think it is much, just a speed bump.
Favor a fade the news type trade on the trade news in SPX. First steps are to drop under 3161 and 3153.
Nice drop in bonds today in what could be [III] of c of (b). Best if this drop pushes to 154^30 or 153^26 for wave [III].
SPX ran up to a resistance zone that can still be a wave (B). Why does it matter if the high is a (B) or [III]? Just to narrow down possible forms for wave [IV]. Short term, it would look better to see a little more bounce or sideways movement before trying to break under the moving averages and 3152.
The ECB press conference was moving the market much but the trade deal enthusiasm is pushing SPX to new highs. Aim for 3166 or 3173.
Today was a bit anti-climactic for a FOMC day. Bonds poked above the moving averages and fell back to them. It isn't crystal clear if [Y] of b is finished. I've made slight modifications to resist on this chart. First resist at 159^05.
SPX fell from the 3141 resist this morning and is slipping under the 20 EMA, a minor win for the bearish forecast. I prefer lower on the news this afternoon but have added overhead targets if I'm wrong. If they do spike lower, I like 3118 or 3111 for targets.
S&P 500 futures are up a bit this morning but under the high from yesterday. I want to see resist at 3142.50 and 3146.75 to hold and prices to drop under 3129.50 on the way to at least 3110.00. Probably best not to expect much until the FOMC statement at 14:00.
As expected, bonds was trapped between 158^24 and 157^06. Ideally we see a break lower from here to at least make a new low under the November low.
Bears have an opportunity to drive lower this afternoon and tomorrow morning in an effort to get most of wave (C) of [IV] done before the FOMC statement and press conference tomorrow afternoon.
S&P 500 futures have slipped lower in the overnight in what I'm calling (C) of [IV]. I'd like to see lower to test 3110.00 or 3096.50 as a minimum target area. Resist this morning at 3129.50 and 3138.50.
Bonds traded inside to that of yesterday today. I see little reason to expect much different till after the FOMC on Wednesday afternoon. Till then, I expect bonds to trade between 157^06 and 158^24.
SPX opened near the upper support today at 3141 and rose briskly for about a half hour but failed to make a new high. From just after 10:00, it has been slipping back to test 3141 and probably 3139. The failure to poke to a new high this morning from the initial test of support opens the door to bears to take control if they can keep any reaction to support under 3145.
Bias is lower in bonds while under 159^07 to test 156^31 or 156^13.
Charts added to this post as I complete them. Full post ETA 10:30.
Pretty neutral trading in bonds today as it hugs the moving averages. Will see if the data tomorrow morning can cause it to fall away and break under 157^06.
SPX fell away from resist this morning but then began hugging the moving averages post 10:30. Can probably treat the escape of the range as a type of breakout trade that either takes the market...
Charts added to this post as I complete them. Full post ETA 10:30.
Bonds could not poke over the high from yesterday to test 161^02, but instead fell back to test the daily moving averages. Could wave [Y] of b be complete? Yes, technically the form is good enough at this point. From a practical standpoint, probably should look for confirmation such as a drop under the moving averages before getting too excited about a reversal.
SPX reached resist quickly this morning and has been stalled for a few hours. I think bears have a chance to take the first step and drop under 3112 and test 3108 or 3102. 3102 will be the true test...
Charts added to this post as I complete them. Full post ETA 9:45.
I've changed my count in bonds to better reflect what is happening at the moment. This strong move in response to support at 157^06 implies the 'b' wave is incomplete and I have penciled it in as at 3-3-3 type correction. Next resist at 161^02.
Weekly updates & other posts
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Since bonds do not have a clear five wave impulse down from the rejection of 156^14, I think it best to allow for an attempt to retest resist again into the FOMC meeting. Overall the cyclic position suggests the rise up from last year is late in development.
Making a UNG update since I spent time staring at the daily. First, the weekly chart. Nothing new from when I last posted it. I think UNG is trying to feel out for a low in the 62 week cycle. Price needs to be over 21.65 to cause bears to cover.
At the start of 2018, EWI ended wave [e] of a triangle and dropped in the first five wave impulse lower at the end of last year. Since then, EWI has been bouncing in a three wave move for a wave (ii). While having tested a possible target at 28.83 two weeks ago, it strikes me as too aggressive to say that wave 'c of (ii)' is complete while above 30.00 as the overhead target tested so far is a bit short of what is typical for a wave (ii).
Treating this overlapping bounce in EWZ up from the low last year as a 'b' wave and expect prices to turn down again in an impulse over the next few weeks.
Traders should watch for a pullback or a breakout
I'm sticking the weekly chart of the Natural Gas ETF UNG here until I spend more time looking at the daily chart at which point I will make a separate post for UNG. I have been looking for a possible wave (v) low develop for the past month or so and while it dropped under the targets I had listed, this does look like a possible low. Until over 21.65 and 22.58 there is a chance they retest the low though if they did, it should be brief.
One of the reasons that I have been skeptical about the gold rise is the correlation that it has had with the Japanese yen and I'm still bearish yen as the triangle is still valid here.
Over the last few weeks, bonds have been forming candle wicks against resist as the two dominant cycles are cresting. I continue to think that bonds are close to reversing lower but need under 153^16 for first confirmation.
We are starting a holiday week with positive news over the weekend. Wednesday is a half day with Thursday closed for the US independence day. Friday morning is the NFP.
Cycles and an exhaustion study agree with my wave count that bonds are ready for a reversal. First evidence of a reversal is for bonds prices to drop under prior resist at 153^16.
Don't be fooled by the steep rise
But truncation also a possibility
Primary view is that bonds are late in a wave [II] bounce up from the 2018 low. The faster of the two weekly cycle suggest the top is nearby thought the longer cycle could help hold prices up into July or early August. Alternates, not listed on the chart, are that this is just (a) of [II] and there will be a future retest of this resist zone again after a decline in (b) of [II] and a bullish alternate that treats this a wave (a) of an ending diagonal [v]. All the counts can use at least a retrace lower from nearby.
right where they were supposed to
Cycles and the 9-5 study suggest that bonds are ripe for a reversal. At a lower time frame, it is possible the argue for one last small down and up move but very late in the game as price has reached the next set of resist at 155^04 to 155^21.
Bonds moved from the first target zone to the next last week. Now have an exhaustion signal when the dominant short term weekly cycle it cresting. The longer cycle still has some time left in it but the tailwind should be diminishing.
When I last wrote on UNG, I was looking for a possible truncated wave (v) low in conjunction with a projected cycle low for the year. Prices did in fact climb but was rejected by initial resist at 23.31. Despite that, the overall forecast for a possible low for the year in development is the same.
Leaving the current station soon
Before looking at the weekly bond chart, I want to draw your attention the this monthly chart of the 30 year yields. Yields finally dropped as expected to a new low on the year and at the top target of 27.61. The next target lower is 26.70 but no guarantee it will reach it. My hypothesis is that we are within a in a few month window that sets the low in yields, and high in bonds, for the year.
It's not too late to find the right trade
Bonds are close to retesting the March high and hence may slow or consolidate a bit but think the bias remains up into at least next month, maybe out to August.
Plan is for bonds to rise a bit more into July or August to finish wave [ii].
The weekly cycle in UNG has lengthened and is now forecasting a low over the next several weeks and rises toward the end of the year. The daily chart has a five wave count down from the wave iv bounce high in March. Prices rising over 23.31 is first confirmation that the low may be set though it is conceivable that the turn up is slow like in mid 2018.
Is your seat belt fastened?
Well, interesting start on the week as the trade news has dropped the S&P futures 50 points and bonds up a handle as each jumps in the direction according to forecast.
Second week of bonds holding support at 146^29 bodes well for a rise into July or August for wave (c) of [ii].
Is it time for the reversal?
Bonds trying to regain its footing against 146^29. I put more emphasis on the longer cycle on this chart which continues to climb into August over the shorter cycle which is topping out now.
My power went down for about an hour last week and prompted to pick a book off my bookshelf to read by the window till the power came back on. After the power came back up, I had asked in the chat room if there was any favorite stock that anyone wanted me to look at with through the lens of a technique that I just re-read about. AT&T (T) was suggested so below are my thoughts on (T) and some analysis using a Gann timing technique.
The bounce has been impressive but not surprising 🙂
Tricky position in bonds as we are approaching the next weekly cycle inflection. I prefer that to be used as either a wave iv or as 'c of (b)' both of which call for higher bond prices over the next several months.
Before looking at the weekly bond chart, how about a peek at the monthly 30 year yield chart. The dominant cycle on this chart suggests a low in yields for the year being set in the next few months. This is compatible with the bond forecast.
UNG has dropped from January 16th and from the next pop up in early March which is consistent with the forecast for lower from a wave iv bounce. Both weekly and daily cycles suggest an inflection point is near but price is not as deep as I'd like it. Since we now have prices back into the range UNG was in for much of 2018, I'm not confident in much lower prices but neither can I say lower is impossible. Disclosure, Natural Gas is my kryptonite, it is the market I have the most difficult time with, so take this accordingly, but I think we are in an area where a long trader can begin to accumulate.
Our main scenario is bearish, but there's an alternate too
Bonds appear ready to enter a couple weeks of correction before rising in one last impulse to finish (c) of [ii] up.
I've decided to relent and move (b) to the low of the three month consolidation in bonds and thus looking higher for (c) of [ii]. The next ideal cycle inflection is April 12th so plenty of time for (c) to stretch a bit higher.
I still like the idea that the (a) wave up in the bonds off the low is in but can live with 'b of (b)' testing or even exceeding the high as an alternate. I have included the monthly line on close chart to put things in perspective.
This spring might see a downward cascade
I've stared at the bonds charts on and off for a few hours and is slowing me up getting this post off the ground. Maybe I should just put my thoughts to bits and explain what I have been thinking about.
Quick update on copper. Copper has softened against resist and either set a (b) wave high or 'a of a more complex (b)'. Looking at a daily chart there is some wiggle room for a modest new high in the short term if they react strongly to support at 2.88. I have also included a chart of the copper mining ETF COPX so as to have a visual of the possible complex (b) wave alternate.
Back when I last updated UNG charts, I thought a bounce was due and in fact one has taken place. The question now is, was the low in February the end of the pattern down from the November high from last year or is there one more low left? I favor the latter because fourth waves typically have a complex wave form and we have yet to a new low or test of the 2017 low. For timing, thinking the best time for a low is late March or early April, even it turns out to be a higher low.
Bonds are closing in on a (b) wave low over the next few weeks. There may be a short term bounce against 143^20 but as long as bond prices remain under 144^31 prefer lower to the next weekly support at 142^01 or a daily target of 141^30.
When I last posted charts on Japanese Yen, I was looking for a bounce up from a possible (d) wave low of a triangle [iv]. It looks like the last wave of that triangle, wave (e), completed at the start of this year. Cycles suggest wave [v] down is in progress and could last till August of this year
Bonds should at least eventually retest 143^30 before advancing in the third part of a wave [II] later this year. In the shorter term, it is not clear if 'b of (b)' is complete as there was a bounce...
In the short term copper has advanced as I laid out in the last daily chart though reaching initial short term targets now so I thought I would give an update. Big picture, this is either working on a (b) wave or the first step up in a (b) wave depending on where you place the (a) wave low.
We expect a reversal
Not much change in bonds. Looks like the 'b of (b)' is still in development. Thinking it best to allow for 147^22 to be tested this week. If at the end of the week bonds are still held back by 147^02, then that might be it.
Since the middle of last year, my view has been that copper needs to bounce in a (b) wave as preparation for rolling down again in a (c) wave. Copper is now at an initial target for 'c of (b)' at 2.85. When dropping down to a daily chart, you can make a case for a little push up for one more wave up so as to get a five count up from the early January low. Once copper does roll lower, if it makes a higher low to the 2016 low, it will qualify as both a wave [b] or [ii]. If it eventually makes a new low to the 2016 low, it will be valid as a [b] wave low.
It might be making a durable low
The latest bounce retrace was very weak