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Good morning from South Korea!
Good to see many of the old hands are still here.
Zarif, Cimac, greetings to you both.
Notice that from the Brexit low there appears to be a clean five wave advance not yet complete. Wave 3 is 1.618. Now in wave 5. Wave 4 perfect touch of 61.8.
Naturally I realise that this chart might not reflect the cash market exactly. It is, however, a very nice chart, and suggests 6834 as a target.
IG are quoting SPX at 1261 so unless something happens it’s broken upwards though my target area of 1251/4. Shame because I really liked that idea.
Anyhow, it’s clear that the long side is where it’s time to be, at least for the moment. Will be interesting to see what happens at the Bradley next week, although the upwards pointing charts are in clear divergence with the Bradley suggestion of a weak second half to the year.
Sometimes the Bradley works excellently (like recently) and sometimes it’s utter garbage. We’ll see if the coming months are garbage.
No positions open at the moment – too busy doing my Korean tax return!
SPX printed a slightly higher high at 2156 but again basically spent the day in my 2151/4 target area. Interesting that it’s paused in that area.
I closed out my two small shorts – one at b/e, the other at a modest loss. As I explained above, there are too many doubts and I’d rather stand aside until I see a specific sell pattern.
This of course is what the entire internet is now talking about for SPX – a move upwards equal to the base of the triangle.
There will clearly be lots of longs/shorts at that break point of 2130, and it might be short covering that has pushed us to 2155.
At some point a market will (usually but not always) come back to test the break.
The Bradley of course does not fit with the idea of a massive bull run. But it’s been wrong before, and might be wrong this time.
I’d really like this to be a complete five wave thing, but as you can see it can be interpreted in a much more bullish way.
SPX went straight up to my target area of 2151/4, spending most of the day toying with 2155. So it’s slap bang in my area. Unfortunately the shape of the rise didn’t fit with what I expected, there isn’t really an explicit sell signal (and no classic candle top), and also it happened a few days before the Bradley.
So I’m encouraged that it zoomed to my area and stopped dead. But on the other hand the shapes and timings etc give me cause for doubt.
I’m short, but with a close stop at 58. If it continues upwards through 58 I think my analysis will be wrong, and it’ll be time for a rethink.
I don’t have any other bearish counts, so if my plan fails the market will likely continue much higher, into the 2200 – 2500 area. Of course with the upwards break through 2130 the entire internet is calling for a strong move higher (2130-1810)+2130 and of course that might turn out to be correct.
But for the moment it stopped dead at my target, so I’ll be patient and see what happens.
Original chart:
Yes, it’s gotten to the 2151/4 target area I mentioned. It didn’t get there in quite the shape I imagined, but at least the idea was right. Now we need to see if it tops out or just continues upwards. If it doesn’t reverse but continues northwards, then of course my strategy is, umm, screwed, and something else is going on.
Bradley date is just around the corner.
I’ve looked again and still think SPX needs to dip back to the 2130 area over the next day or two before trying for the 2151/4 target area. I’m short a little from 2146 just to see if I’m right.
You might wonder why on earth a rubbish currency like the EURO will rally from circa 98/102 upwards to 120/6. The logic is that the Fed has operated a ‘guaranteed deposit rate’ of 0.5% for banks to park money. With interest rates in the Eurozone zero or negative, many Banks have been shipping money over to their US branches then depositing at the Fed. This gets them 0.5% guaranteed plus exposure to the Dollar.
If the Fed brings the guaranteed deposit facility to an end (instead of raising interest rates, for instance), then the Dollar will start to fall and European banks will start shipping their money back home thus exacerbating the fall in the Dollar and rise in the Euro.
Whether this happens of course remains to be seen, but for the time being the chart suggests a dive to 98/102 at some point in the coming months.
For EURUSD I’m working on the assumption that the recent action is a five wave decline not yet complete, currently tracing out a 4th wave triangle.
Target area is the 98/102 range, calculated as c=a from various earlier drops.
I originally thought EURUSD would go back upwards to retest the broken support in the 120 area, and I still think that will happen but only after the current five wave decline completes.
If it IS a triangle, then there’s a bit more action needed, including a last raise into the 114/6 area which would be the perfect area for a short down to 98/102.
If that happens, then I think EURUSD will reverse upwards to retest 120 or slightly higher (perhaps 126).
