Over the last week, the equity markets achieved the minimum requirements for a 5th wave advance with new ATH’s above 1802.33. The SPX continued towards my 1810/15 target with ES achieving and stalling at my month-long target of 1809 and the DJIA heading towards long term broadening trendline resistance at 16137. There is no clear evidence of a reversal as yet so I will remain patient. The Euro pushed higher as warned in last Friday’s twitter post creating a more complex correction but one which I believe will be fully retraced. Those who follow me on twitter had advance warning that the rally started to look impulsive to the upside as I covered shorts. The commodity currencies of NZD, AUD and CAD have all continued lower respectively against the USD while the USD/JPY strength continues unabated in it’s 5th wave advance.
The SPX is now within pips of my wave (3) target zone after wave iv caught support at the Maginot Line as expected and continued higher in wave v of 5 of (3). While minimum targets have been achieved, there is no indication of a reversal yet. At this point, I expect any decline to gain support in the 1740-50 range which is previous 4th wave support and a Fib 0.382 retracement of wave (3).
The immediate short term count has wave v of 5 of (3) complete at 1808.42 and a decline below 1800 will increase the probability that the immediate near term top is in.
The DJIA weekly chart shows the long term broadening trendline dead ahead which should provide near term resistance. How the DJIA reacts to this resistance should be an important tell.
As I have said previously, it remains difficult to get too bearish on the broader equity indices while the BKX has clearly broken higher in it’s 5th wave and has further room to run on the upside. Wave iii of (v) does not look complete and we still expect wave iv and v to come, which means higher prices in the near term. I have a cluster of measured targets in the 71 – 72.50 range for BKX
The commodity currencies such as the Aussie$, Kiwi$ and CAD are at important support. What we know as traders is that support remains support until broken. The AUD/USD is showing signs of a tradable low (bullish black count) but given the bearish performance of the NZD and CAD, the door is still wide open for a nested 3rd wave decline (red count).
The NZD/USD prevailing H&S pattern continues to play out and near term there are some key levels to watch. We currently have 3 waves into the recent 0.8116 lows which is important! The immediately bearish (black count) has a series of nested declines (if it remains below 0.8213) which will likely accelerate on a break below recent lows in a nested 3rd wave. Above 0.8213 will likely see a push back above 0.8267 in an impulsive wave c of (ii) for an expanded flat correction (red count) to provide one more whipsaw and great s/t short entry before wave (iii) of [iii] of 3 of  begins. It should be a sight to see indeed!
The USD/CAD has also reached important trendline resistance and is threatening to break higher (weaker CAD). Any trade above the labeled wave (C) high (1.0616) will likely kick-off a sustained advance out of this long term basing formation.
The EUR/USD short continues to evade me with the counter-trend advance becoming more complex than hoped (not that hope has ever been a particularly good strategy). I have labeled the immediately bearish count where wave (Y) of 2 / B is complete and wave 3 down has begun OR the recent rally is only wave (a) of (Y) with waves (b) and (c) to come to complete the pattern in the 1.3650 – 1.37 area (red count). Either way, the rally counts best as corrective and I am expecting it to be fully retraced.
GBP/USD has finally pushed to new highs in it’s 5th and final wave higher but does not yet count as complete. I am unable to count a clean impulsive 5 wave advance for this 5th wave so I will give the chart more time to develop for more clarity. In the meantime, I expect further upside for this pair.
The USD/JPY’s rise continues unabated in it’s 5th and final wave for this 2 year impulsive rally towards my 105 target. Short this at your peril as it continues to gain momentum as you’d expect in wave (iii) of 5.
Gold and Silver continue to search for support but gold bears in particular should be cautious at these prices. I can count a clean 5 waves down in wave [i] (black bearish count) or red C of (B) which would be near term bullish. We currently have 3 waves down from the $1434.4 highs nearing equality which suggests that the near term trade is to be long of gold. Either way, the PM’s are overdue for a correction to the upside so bears should not be complacent.
That’s all I have for now for some Thanksgiving reading. Happy turkey day everyone…gobble, gobble 🙂