Wednesday printed bearish engulfing candles for SPX, DJIA, NDX, SOX, RUT, BKX and DJT… never a positive sign for a retest of recent highs. SPX targets remain as per my weekend update with the 100 sma firmly in sight on a break of the 50 sma. Only trade above Wednesday’s high would negate the near term count. This has been a volatile week with every gap higher open being sold off aggressively which is NOT bullish. Caveat Emptor…
Near term, the SPX continues to count best as yet ANOTHER expanded flat (3-3-5) targeting 1812/17 although we should expect the bulls to strongly defend the 1840 area. Sometimes H&S patterns align strongly with the wave count which increases the odds of the pattern “working” which is the case now. The measured target for the H&S of 1815 aligns with a cluster of Fib targets and 100 sma. The red count would be materially more bullish if the 1840 area is successfully defended but this is NOT my preferred count.
The USD/JPY is now in its 3rd inside week, trapped within its 103.77 – 100.75 trading range. I am still expecting this range to break to the downside. Trade below 101.20 and then 100.75 will likely see a 3rd wave accelerated decline towards my initial 97.50 target.
The near term count of the USD/JPY is less clear. The green count implies a re-test of the top end of the range while my preferred count is for an immediate decline below support as long as 102.50 holds to the upside.
The Nikkei 225 paints a similar picture of counter-trend rallies within an ongoing bear market…
While I have been looking for a bullish reversal for the DXI, we have NOT yet seen a complete 5 wave impulsive rally to indicate a change in trend. Near term, I am looking for a triangle thrust higher in wave (v) towards 80.50 to complete 5 waves up before a bigger picture rally to “at least” 81.50. Below 79.75 and the count gets messy once again. The lack of follow through is concerning for the US$ bulls.
In conclusion, my SPX roadmap continues to track well as we look lower in the near term.
Trade what you see and not what you believe 😉