Mixed Messages

Update: Friday, March 31, ~10:20am EST

Above is the 60 minute chart of ES. A quick measurement this morning shows an option of reaching up as far as 2376 for the top of this B wave. This would allow the c wave to reach 1.618 X the a wave. It will be down from there.

There are two points now for a top, either 2367 or 2376. The bullishness this morning tends to point a bit higher to the 2376 level.

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Market Update for Friday, March 31, 2017

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Make sure you zoom the video to full size with frame expander (arrows) in the bottom right hand corner and also set the quality to as high as your web connection allows. This is an HD quality video so the best viewing is at that level.

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Market Update for Thursday, March 30, 2017

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Update:  Wednesday, March 29, Noon, EST

Above is the 15 minute chart of ES. I mentioned in the video last night that we have the option of heading up to the 2366 area, which is the 62% retracement level from the very top. That looks like where we’re headed and it will likely take the rest of the day to get there.

Hitting the 62% level would make this large wave up from 2317 a B wave. So the wave down will be at least as long as the A wave down (the entire flat) and would target at least 2285 (and probably lower).

This first leg up looks like a zigzag (an A wave) and a B wave. Extending 1.618 from the A wave (that would mean the A=C wave length) gives a target of 2366. So there are  two different measurements targeting the same spot. Down from there to a new low.

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Market Update for Wednesday, March 29, 2017

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Market Update for Tuesday, March 28, 2017

A bit longer tonight: my apologies. A market somewhat in disarray, but I wanted to spend a bit of time on the bigger picture and how I see the various markets working on getting aligned once more for the final wave.

Make sure you zoom the video to full size with frame expander (arrows) in the bottom right hand corner and also set the quality to as high as your web connection allows. This is an HD quality video so the best viewing is at that level.

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Update: Monday, Mar. 27, 1:40pm EST

Above is the 15 minute chart of ES, with a revised wave count. I’m not sure of the overall pattern and count at the moment, but the 3rd wave down yesterday and this morning is in 3 waves. I’m expecting another wave down from 2340 and I’ve got a target still of about 2300.

The wave up this morning is in 3 waves, with the C wave 1.618 X the A wave at 2340/1.

Keep in mind that if this fourth wave in ES drops as far as 2300, looking at the structure of the entire set of waves up, that may be all we get. This flat is an abc wave on its own, so we might go right into a fifth wave up.

I put the entire structure in the corrective realm, which means there are no real rules as to wave lengths and the entire structure looks somewhat “wedgy.”

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Last weekend, I warned of a potentially dangerous trading environment in the US indices. The pattern was uncertain and we could have gone either way.

We only had a couple of options. ES/SPX was either in an ending diagonal, or we had the possibility of a flat (3-3-5) down to a new low. We got the flat—well it looks like a flat, but it doesn’t look complete. I caught the turn and commented on it just as it topped, but it came down so fast that it was difficult to capitalize on.

And now? Well, we’re not much further along in knowing the short-term direction in the US indices. In ES, the flat does not look complete, and technically, the ES/SPX indices are still in a smaller 4th wave, sitting right on the 38% retracement level within the larger wave 3. That means that we’ve completed the fourth wave of the third only so far.

So … we can go up or down at this point—the signals are mixed.

Other US indices are also sporting mixed signals. The flat looks complete in the Russell 2000 and 3000. In the NDX, we look to be tracing out a zigzag after a double top. This weekend, it’s suggesting a C wave down to a new low is next. That would suggest a continuation down for ES/SPX.

So, rather than guess, let’s sit on the sidelines and let the market tell us the next move.

Currencies, gold, silver, bonds … not much of a puzzle there. They’re all in corrections of one type or another.

So here’s my recommendation:

Fourth Waves are my LEAST Favorite Waves. I try to stay away from them, as they’re very difficult to predict, just like the one we’re currently in in SPX/ES and their sister indices. My recommendation is to sit on your hands until we see the next move in the US market.

In this weekend’s  video, I go through the options and my concerns. In the meantime, we’re moving towards set-ups in currency pairs. The best ones are:

• EURUSD
• GBPUSD

And there are set-ups now in

• gold and silver
• oil (after the next correction, I think)

Patience will be key as we wait for the rest to US market to show its hand.

The Longer Term Picture

Last weekend, I took many hours to review the market and in particular a look at longer term projections, with measurements of all the key indices and currencies. I’ll be adding a longer term prediction video to the post this weekend, once we see the next move in currencies. I’ll let you know when it’s available through comments.

As you know, I’ve mused that we’ll either top in June or September. I think I have a clearer answer now as to what the time frame may be.

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Here’s the latest daily chart of ES (emini futures)

Above is the daily chart of ES (click to enlarge). The big question this weekend is “What wave are we in—the fourth of the third wave or a larger fourth wave of the entire C wave structure up from about 2006 in the SP500 from the turn in early July, 2016?”

As I write this, I’m expecting a further drop in the current wave in ES, with an open lower in SPX perhaps Monday. However, this drop may not be enough to signal which fourth wave we’re in—the fourth of the third or the larger fourth wave.

However, both situations require a rally. If we’re in a larger fourth wave, the rally will likely retrace only 62% before we get a larger C wave down to a new low. The eventual target for a larger wave 4 is 2256, but there are also options for patterns that may not reach that level.

If this is wave 4 of 3, then we’ll head back to the top.

Summary: We’re at an inflection point. We’re either still in wave 4 of 3, or we’re near the end of the A wave of an ABC drop into a larger 4th wave. We should have a good idea which it is early this week.

After completing the larger fourth wave, we’ll have one more wave to go, which could be an ending diagonal as a fifth wave. The long awaited bear market is getting closer.

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Here’s the latest HOURLY chart of ES (emini futures):

Above is the 60 minute chart of ES (click to enlarge). Please watch the video to get the full story on what’s happening short term.

This past week, the market suddenly came down in a what appears to be a flat, but it’s not quite complete. Technically the C wave has completed 5 waves. However, the fifth wave does not look complete and I expect more downside. The C wave 1.618 X the A wave down would target 2312.50. That’s a typical length for a C wave of a flat.

Flats eventually completely retrace. However, they can also be part of a combination wave, with a triangle or a zigzag as the next following pattern (or even another flat).

There are too many options to be sure of the next move.

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Some housekeeping:

Andy Pancholi Turn Dates (March, 2017)

• SP500: Tu28/W29
• EURUSD:  Tu21/W22

New Free Blog Post: The Cycle Turns on Canadian Banking

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Here’s a video overview of the market for Monday, March 27, 2017

Make sure you zoom the video to full size with frame expander (arrows) in the bottom right hand corner and also set the quality to as high as your web connection allows. This is an HD quality video so the best viewing is at that level.

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Charts Going into Monday

Above is the 2 hour chart of SP500. As with ES, we look to have almost completed a flat. However, the C wave down does not look complete.

A C wave may continue down to the 2316 area. That would suggest that we’re in the larger fourth wave. The next move up would be a B wave correction, which would likely retrace around 62% before heading back down in a much longer C wave. Best to wait for that opportunity, should it arise.

Above is the 2 hour chart of SPY showing the same pattern as ES and SPX. I project a possible bottom for the flat of about 231.95, which would then likely produce a B wave corrective bounce.

Above is the daily chart of the US Dollar. No change here in terms of my prediction.

On a near term timeline, we may get a retrace here, as I suggested last week. It hasn’t happened yet, but it may still. We need to get to a new low (below 99.22) to confirm that we’re in a third wave down.

Longer term, 1.618 X the first wave, (the target for the third wave) is somewhere close to 94.83. The movement of the dollar determines to movement of just about everything else these days. The longer term target for this wave down is 91.88.

Above is the daily chart of EURUSD. The bigger picture is that we’re headed up towards a target of 1.16 and change before we get a really major turn down. We need to reach a new high above 1.08247 to confirm we’re actually in the third wave up. More in the video.

The wave up looks motive, but very choppy, with lots of overlapping subwaves. However, I can make a case for 5 waves up.

Shorter term, I’m expecting a retrace perhaps as much as 62% (~1.0624). The other currency pairs also are either in a corrective wave, or just entering one.

Above is the 4 hour chart of USDCAD.

I’m expecting a C wave to continue to the 1.34373 area (62% retrace level of the five waves down) before a turn down into a third wave with a target of 1.30108 (for starters).

The longer term target is 1.19. This is the best set-up I see anywhere, but we’re not quite at the entry level. Let’s look for it in the next couple of days.

Above is the daily chart of the AUDUSD. The chart above is the bigger picture to my short term projection in the video. No change in that respect. However, the shorter term direction is starting to get much clearer.

In the shorter term, we did not reach a new top beyond wave (1) so, in fact, my original count is correct so far. This wave up looks like a “5” and if so, should correct to my original target of 0.738. We have an a wave down and it looks like we’re about to trace out a b wave. .73848, if we get there is a perfect set=up  for a long entry for the final wave up to the eventual target.

I’ve an eventual top target of .828 for this pair, which is just shy of the 38% retracement level of the entire larger wave down (from the year 2011), which would make this wave 4.

Above is the 4 hour chart of GBPUSD.  I can count 5 waves up in this pair and similar to the other currency pairs, it looks like we’re headed into a correction. If we drop down 62%, the target is ~1.22714, which would be an excellent entry for a long play up to the 1.52 area.

The one thing that bothers me is that this wave has not reached the level of a previous 4th wave, and so we may only retrace 38% and put in a fourth wave here, a larger retrace to come later.

More information on the short term prognosis in the video.

Above is the 4 hour chart of USDJPY. I would be cautious with this pair. The count shows three waves down from 118.62, with the A wave down to ~11.66 looking very corrective. This suggests to me that our target is the top at 118.6. However, it’s been that way for awhile now and we haven’t turned up in a serious manner.

I would not play here unless I saw 5 clear waves up at small degree (5 min chart) and then 3 down. We completed a double bottom on Friday, which helps the bullish prognosis. We’ll just have to see what happens.

Opportunity! Above is the daily chart of gold. We’ve completed a very rapid fall into an “a” wave as predicted and a “b” wave as predicted. On Friday, we looked to have completed a small degree lower high. This commodity (and silver) is ripe for a larger turn-down into wave “c.”

Because of the height of the “b” wave, my targets to the downside have changed slightly. I’m looking for a minimum of 1182.56 (same length as the a wave) and possibly much lower. We may end up with a double bottom, but I’m not going to call this until we drop below the current target. We’re looking for 5 waves down.

When we reach our target, we’ll turn back up. The final upside target is around 1585.

Opportunity close! Above is the daily chart of WTI oil. We dropped like a rock from the sideways action that went on forever and we’ve completed 5 waves down.

My measurements and the underlying wave structure are suggesting this wave down will be in 5 waves (the first part of an eventual zigzag. In that case, I’m projecting a turn up here to about 50.64 (a small 4th wave), then a turn back down to about 43.00. That should end the A wave.

Then, I’d expect a turn up in a B wave to somewhere around 51.50 before a turn down in a C wave to our preliminary target of 33.00.

Finally, we should get an E wave up to the upper trendline to complete the larger pattern. That would be followed by a final 5th wave down to a new all time low.

Good trading!

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