My “perfect storm” of last weekend had no real effect on the market, although ever since, the US indices have been extremely weak. It’s amazing that with a market that had so much underlying bullishness for the past three months, that now we’re in a situation where it’s struggling to make it to a new high.
That’s a good thing at this point because we want this market ready to keel over when it gets to that new high. It means that after the turn down, we’re likely to have a fast set of waves to the downside, which is what I’ve been calling for all along. The wave down should have somewhat of a similar look to the waves that came down from the top in February.
It was a difficult week but we caught some important turns. A questionable market tells you to “stay away.” Playing the “little stuff” is a sure way to lose money, because the chaff is often unpredictable. You can get sudden turns that are volatile and knock you out of a position, only to turn back in the original direction an hour later. That’s more usual than not in a corrective environment, which is what we’re currently in.
A trend is what you want to trade. The trend is your friend.
The lesson is that if you’re not sure about the market, eventually, it usually tells you where it’s going and it’s best to wait until you get a clear signal. It doesn’t happen every week (and not often enough!), but I’m very thankful for the times that it does happen. This is one of those times.
Futures traced out ending diagonals late Friday (not quite finished), so watch for a rally this coming week.
July 4 is next Saturday, accompanied by an Eclipse of the Moon. There’s a full moon on the Sunday right after (July 5). On top of all that, the labor report is out early on Thursday morning (July 2), and the market is closed on Friday (July 3) in observance of Independence Day (July 4). It’s yet another “perfect storm” weekend! I would expect us to stay aloft through the next week and it’s entirely possible we’d turn down right after it.
Know the Past. See the Future
The Second Wave (COVID) — from last week
Dr. Ron Paul has weighed in on the fabricated media reports, particularly regarding Texas, which has denied the stories that their ICUs are full. They’ve only see a very few cases.
The propaganda is SO blatant!
Want some truth?
My new site and discount for monthly articles and video on how to stay healthy and wealthy over the next five years is now live. Getting to the real truth, based on history, is what I do, inside the market and out.
All the Same Market.
I’ve been mentioning for months now that the entire market is moving as one entity, the “all the same market” scenario, a phrase that Robert Prechter coined many years ago, when he projected the upcoming crash.
We’re in the midst of deleveraging the enormous debt around the world. Central banks are losing the control they had and we’re slowly sinking into deflation world-wide, with Europe in the lead.
The US dollar is fully in charge of both the equities and currencies markets. They’re all moving in tandem, as I’ve been saying since September of 2017. Over the past three years, their movements have been moving closer and closer together and one, and now they’re in lock-step, with the major turns happening at about the same time.
it’s challenging because often times currency pairs are waiting for equities to turn, and other times, it’s the opposite. The other frustrating thing is that in between the major turns, there are no major trades; they’re all, for the most part day-trades. That’s certainly the case in corrections, where you very often have several possible targets for the end of the correction.
We’re now very close to a turn in the US indices, currency pairs, and oil. Gold looks like it’s still on hold a little longer. Elliott wave does not have a reliable timing aspect, but it looks like we should see a top very soon (possibly around the July 4 weekend).
Elliott Wave Basics
Here is a page dedicated to a relatively basic description of the Elliott Wave Principle. You’ll also find a link to the book by Bob Prechter and A. J. Frost.
Get an upper hand … JC 2
Tops in your field DZ 2
The best of them JL 2
Couldn’t be happier … KK 2
A true expert in Elliott Wave FL 2
Have not had a losing week RW 2
US Market Snapshot (based on end-of-week wave structure)
This chart is posted to provide a prediction of future market direction. DO NOT trade based upon the information presented here (certainly NOT from a daily chart).
Above is the daily chart of ES (click to enlarge, as with any of my charts).
We're sitting close to the top of this extraordinarily large countertrend rally, but we're still not quite done. We've dropped in a corrective wave, a fourth, with a fifth wave up still to go. Since fibonacci measurements target the current top (3233 in ES), I'm not expecting much more than a test of that high, or minimal poke above.
After the options expiry event last Friday, the market has become decidedly weak, but the waves to the downside are clearly corrective and the signs across all asset classes also point to a final high in the works. Most obvious, from an Elliott Wave perspective is the current count on the US Dollar Index (DXY). The US Dollar is calling the shots and where it moves, so does the rest of the market, albeit, for the most part, in the opposite direction.
On Friday afternoon, it was clear we are tracing out what look like ending diagonals in futures, so I'm expecting a turn up on the weekend or Monday.
Next weekend is the July 4 holiday, which is usually very positive. It will be accompanied by an Eclipse of the Moon and will be followed by a full moon on Sunday. Another "perfect storm" weekend. That combination sets up for a possible "hangover" on Monday.
As I've said over and over: There's a lot of manipulation going on (the Federal Reserve is doing whatever it can to prop up the market with more debt) — a very stupid idea, and you and I will pay for it in the end. Inflation through the extraordinary "printing" of debt has had its affect on the market overall for a very long time. However, the problem is simply too humongous (the dollar is a worldwide phenomenon) and the Fed will fail. We're getting close to seeing the result, which will be spiralling deflation.
Summary: We appear to be in a "combination" fourth wave down from the 3400 area. We have an A wave down in place from 3400, a B wave up almost to that same level, and now we're expecting the long-awaited C wave to unfold.
The US market is extraordinarily weak ever since options expiry last Friday. However, one more high is in order and the rally should appear soon.
The balance of the drop from February should be a combination pattern and, as such, may contain zigzags, flats, and possibly a triangle or ending diagonal at the bottom.
Look for a new low below 2100: There are several possible measured objectives below that point.
Once we've completed the fourth wave down, we'll have a long climb to a final slight new high in a fifth wave of this 500 year cycle top.
Trader's Gold Subscribers get a comprehensive view of the market, including hourly (and even smaller timeframes, when appropriate) on a daily basis. They also receive updates through the comments area. I provide only the daily timeframe for the free blog, as a "snapshot" of where the market currently trades and the next move on a weekly basis.
I do a nightly video on the US indices, USD Index (and related currency pairs), gold, silver, and oil) right down to hourly charts (and even 5 minutes, when required).