I’ve been holding off updating my last US$ analysis until I was more certain that a low for my projected Wave 3 was in place, and I think that is pretty likely with this week’s close. My last analysis was done on September 8th when I thought that we had just completed the Wave 2 lower in what I was predicting to be a 3-wave move … that analysis turned out to be pretty accurate (click here). Here are the US$ monthly and weekly charts I posted back on September 8th. Continue reading
Yesterday’s high of the day was $270.00 for the SPY … that took price officially into the SLOT resistance zone that I like to monitor for counter-trend rallies. Due to the strength of the move off of the prior highs into Friday’s low, I think that it is highly likely that we need at least one more leg to the price structure we are currently in when looking at the 195-min chart.
Whether that next move to a new lower low is the last leg of a corrective price structure that precedes a push up to new higher highs is yet to be seen. I suspect that due to the strength/melt-up of the market into the January highs, we are going to need a bigger more complex price structure move lower … that is why I believe traders will see a 3-wave structure to this correction before it is all said and done.
Here is what I think traders should be preparing for …
Bullish Scenario – SPY 195 Minute Chart #1
The typical turning point for a corrective bounce is that 61.8% resistance level – $273.72. The “C” wave of an ABC zigzag will typically terminate at around that 1.272x extension target, which would see the SPY get down to the $243.76 level.
Bearish Scenario – SPY 195 Minute Chart #2
So the near-term resistance zone for a bigger 3-wave corrective move in price is still at that 61.8% resistance level … Wave-2’s typically will terminate at the 1.618x extension target zone at around $232.12. The final Wave-3 target zone would be down at the $220.99 level.
Bullish/Bearish Scenario – SPY 195 Minute Chart #3
In either of the bullish/bearish scenarios I depict above, price will need to find an interim resistance level here soon … the intra-day high so far today for the SPY is at $271.79, which is pretty close to the last pivot high of $272.36 and that 61.8% resistance level of $273.72. Maybe we grind into that final resistance high on Friday which will then set up the next leg lower to begin next week.
Bottom Line – I believe the strength of the melt-up into the January highs, and the strength of the push lower last week will lead to at least a 2-wave structure lower into support. Personally, I think a 3-wave structure is what is going to happen but I will be giving the more bullish scenario respect as we push into that $1.272x / $243.76 zone as well.
Cheers … Leaf_West
Lots of people waking up to the move that crude and energy stocks have made since I talked about a possible swing low in energy stocks back on August 29th (see post here and here). Like happens often, the market pundits and talking heads starting recommending the sector as we push into resistance levels/zones (i.e., the SLOT). Here is how I see the charts …
Crude Futures – Daily Chart
Crude is pushing right into the measured 1.272x target for the 3rd wave of the move coming off of the low made this past summer … I see 3 nice waves to the move and three minor waves in the bigger wave 2 and the terminating wave 3.
So for traders that don’t trade crude futures, how do they capitalize on this end to what could be only the first leg higher in crude in a bigger commodity rally that could play out over the next several years?
S&P Energy Sector – Daily Chart
The light blue warning candles that my software is painting, warns traders of an extended move in price away from the slower moving averages … the “return to the mean” effect is telling traders to take profits here in the short-term and/or sell some short-dated at-the-money or near-the-money calls for XLE or ERX the leveraged bullish ETFs for the energy sector.
3x Bullish Leveraged Energy Sector ETF – Daily Chart
The January monthly $40 calls for ERX can be sold for just under a dollar today …. I will look to sell some of these as well as looking for intra-day moves to the downside, as the intra-day moves lower are likely to be bigger than the shorter-term moves higher.
Cheers … Leaf_West
I still believe that my current read of the TSLA bigger price structure is correct and I am looking to get on the books another short position going into year-end. Here is my read of the charts … Continue reading
I have an audio alert set on GDX right at the bottom of my SLOT support zone (78.6% Fibonacci support level) … it activated this morning.
GDX – Daily Chart
As we head into the FOMC interest rate decision next week on December 13th, the market is almost 100% sure that rates are going higher … if that happens, the US dollar should receive a steady bid, and that would lead to a decline in US$ priced commodities like gold. If that happens, gold miners will be sold and as the chart above suggests, price will begin to trend lower.
What if the Fed does not raise rates? That would definitely be a surprise to the majority of the market participants, and likely lead to a huge short covering rally in gold and gold miners. Price for GDX will have completed 3 pushes down into that support event, and be a great level to trade long off of.
I have had my trading hand slapped a couple of times of late, and the best advice I can give anyone here is to sit tight and wait for the FOMC meeting next week.
Cheers … Leaf_West
The 20-year+ ETF for US Treasuries just took out an important pivot ($122.59) I have been expecting here on what I believe is a 3rd wave push in the current downtrend.
TLT – Daily Chart
Cheers … Leaf_West
The market hitting all-time highs here and pushing into the September monthly OpEx tomorrow has me updating my bigger view of the S&P 500 … Here are the charts: Continue reading
There is lots of talk on the business channels today about how bad the US$ is performing this week … the business channel pundits are great at looking in the rear-view mirror to tell us what has just happened – that doesn’t really help traders make money, however. I prefer to look ahead and anticipate what may happen next.
I did that back on March 19, 2017, when I wrote a post about my outlook on the price pattern on the US$ on my old blog site and posted it to StockTwitts and Twitter …
Obviously, the link to my old blog site no longer works, but my thesis back earlier this year was that we had likely made a top in the US$ strength, right when everyone was wringing their hands about how strong the US$ was and how that was going to hurt the economy going forward. Most traders and ALL tv-pundits/economists look at the past price movements of a stock/commodity etc and extrapolating them in a straight line forward. They don’t bother to consider the wave structure of price movement.
Here is the updated monthly chart for the trade-weighted US$ … Continue reading