[ Last weekly analysis] The eighth week of rally, the market is truly like a mad bull. The market has entered into the consolidation region and will meet substantial resistance at this level. The final target should be 900.
Overview of World Markets and Sectors
Still the uptrend, the emerging market is leading, while Chinese and Japanese markets are relatively weakening.
The next chart shows the MSCI World/EAFE/Emerging Market, Shanghai Stock Exchange Composite Index, Hang Seng Index, and Nikkei 225 index. Note the Asian markets are pulling back.
Major indices, commodities, and US dollar are shown in the next chart. Still very bullish.
Sector overview chart. Same as last week: Industrials, materials, and technology are bullish. There is no obvious sign of weakness.
SPX/ES Wave counting
Primary and intermediate waves: Oct 11th 2007 SPX 1576.09 is the end of bear market cycle wave b (in the form of “bull market”) and start of cycle wave c which is in turn another 5 wave down (①,②,③,④,⑤). The first bear market sell off lasted 512 calendar days and ended with the primary wave ① on Mar 6th 2009 at SPX 666.79. In the primary wave ① we can recognize 5 intermediate waves although the last one looks not clear enough. Currently SPX is forming primary wave ② in the form of (A) (B) (C) up.
Intermediate and minor waves: primary wave ② is still unfolding, now it has reached Fibonacci 23.6% retracement level of primary wave ①. On ES, the possible scenario is shown on the following right chart (bullish scenario presented on the last market watch).
A less likely scenario is: intermediate wave (A) ended on Apr 17th at 872; Intermediate wave (B) is either deformed expanding triangle or running flat. Note in this scenario, the wave C should be composed of five waves. Difference between this scenario and previous one: In the previous scenario ES should rise immediately and not fall below Friday low ~862.5, in this scenario ES should just do the opposite.
Scenario C from another EW theorist: in this scenario primary wave ② should finish very soon. In the near term, ES should fall below Friday low to form wave 4.
Lastly take a look at the P&F chart: the market has broken out the resistance at 875; the uptrend line has never been broken; if the current breakout can be confirmed, the next target will be 935.
XLF and SKF
Keep the wave counting in the last week unless it makes a new high. The pullback is not over yet. Upon Monday market opening, keep an eye on the very short term movement of SKF/FAZ. If it cannot go up immediately, the bearish setup will still hold.
Currency Futures and Forex
US dollar: the trend is still down. The sell signal has not been challenged.
USD/SGD: still the down trend, no change compared with last week.
EUR/USD: the wave counting tells the different thing from chart pattern and technical indicators. To be safe, I assume the trend is still up.
Commodities
Crude oil: should go up to form wave C after a minor pullback. No update to the chart.
Gold: It hasn’t broken out from the descending channel, so the uptrend is not confirmed.
No comments:
Post a Comment