Good evening to one and all.

The Lord’s Blessing’s to you all again tonight.

I have only one thought after todays inflation numbers came out.

The big inflation overshoot was such a big surprise last year after a 2yr binge of government handouts and monetary easing.
It is easing off and naturally declining along with a shift into a recession.
Now the handouts are gone,
and the monetary easing is disappearing.
And a sigh of relief echo’s across the financial world.

Watch how surprised the market will be later this year,
when outright deflation takes over,
markets, and prices will be tumbling all around.
Jobs will be evaporating,
and companies will be falling into bankruptcy left right and center.
Unemployment lines will be stretching out the doors and around the corner.
Financial and economic misery is coming.
Todays disinflation is just the beginning.

Kevin C. Smith, CFA

Not so fast. Relative to open interest, it is actually the largest hedge fund short position since right before the top of the market in 2007 which shows that this is not a reliable contrarian indicator at all.

https://twitter.com/bullwavesreal

EURUSD.

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Ok now EURUSD ahs closed out the top of the trend line again after todays spike rally.
This top has completed the ending diagonal pattern for wave ‘c’ of (b).
and also the alternate count was ruled out after todays action.
so,
the options for the main pattern have reduced,
but there is a little more clarity in the pattern now I think.

Tomorrow;
Three waves up in wave ‘5’ is a perfect close to an ending diagonal pattern.
The price is also holding below the top of wave (a) at 1.1031.
Lets see if wave (b) will finally top out and reverse into wave (c) over the next few sessions.
A break of 1.0713 again will confirm wave (c) has begun.

GBPUSD

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Cable is still holding a lower high below the wave [b] top this evening.
The price has traced out a three wave rally to this lower high,
I know the margin for error is very tight here again for this short term pattern.
But,
I can’t rule out the idea that this is a second wave lower high,
and the next logical step is for wave ‘iii’ to turn lower again with a target at the wave (a) high of 1.2200.

Tomorrow;
Watch for wave ‘iii’ of (i) to begin with a break of the wave ‘i’ low at 1.2345.

USDJPY.

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Im taking a slightly different tack on USDJPY tonight.
this involves a larger acceleration scenario in a third wave.
The price dropped today to complete a possible expanded flat correction wave ‘ii’,
and the price is closing off the lows of wave ‘ii’.

If this pattern is correct,
we should see the rally return in wave ‘iii’ of (iii) over the coming few sessions.

Tomorrow;
watch for wave ‘iii’ of (iii) to push above 134.70 to complete.
The price must hold above 132.00 for this pattern to remain valid.

DOW JONES.

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The rally in wave ‘c’ of ‘ii’ has so far topped out just above the 78.6% retracement level of wave ‘i’.
The market did spike higher this morning,
but that rally is now gone as the reversal has brought us back to flat on the session again.
Now is the time we need to see the reversal gain the upper hand again.
The price must start taking out previous corrective lows in the pattern.
And the first lies at 33330 at wave ‘iv’ of ‘c’.
the wave ‘a’ high at 32770 may be a stretch goal at the moment,
but if wave ‘1’ of ‘iii’ is about to take over here,
then that level should be the minimum target for wave ‘1’ black.

Tomorrow;
Watch for todays highs to hold at wave ‘ii’ now.
Wave ‘1’ must begin to take over and break initial support at 33330 again.

GOLD

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Wave ‘b’ is holding below the that wave (i) top again today even with that temporary cpi spike early this morning.
I seem to remember gold rallying hard on the runaway inflation narrative late last year.
I wonder what comes next when inflation turns to deflation this year??

These are just thoughts,
not a price projection!

The price is still on target to trace out three waves down in wave ‘a’ of (ii) this week.
But I want to see the decline take over again in wave ‘c’ of ‘a’ as shown.
And 1950 remains the initial target for wave ‘a’ pink.

tomorrow;
Watch for wave ‘a’ to turn lower again,
wave ‘c’ should trace out five waves down to complete wave ‘a’ later this week.

CRUDE OIL.

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Crude is running higher today in wave (v) of [c] as expected.
Wave (v) is actually quite close to completion now with a top expected around 84.50.
If we see five waves up near that target level this week,
then I will look for a top to form again in wave [c] of ‘2’.
That will leave next week open for a reversal pattern into wave [i] of ‘3’.

Tomorrow;
Watch for wave ‘iv’ and ‘v’ to top out soon near that 84.50 area.
A break of 79.35 again will signal wave (i) is underway.

S&P 500.

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A new top today in the S&P today for wave ‘c’ of (ii) the high of the session did not break above the previous wave [ii] high though.
And now this evening we are closing the session with a spike lower.

I have switched to the alternate count for wave (ii) today because of that early rally.
This is still a simple three wave flat correction overall in wave (ii).
Wave ‘c’ of (ii) topped out just above the equality level with wave ‘a’ which is a pretty soild indicator that the pattern is corrective overall.

And now what I want to see is a reversal that builds up momentum and takes out supports over the coming week.
The wave ‘a’ high now lies at 4041,
so that is the first importand support.
And below that wave ‘b’ lies at 3904.
That lower level gives us a nice target for wave ‘i’ of (iii) to complete.

It may not seem like the market is about to turn lower in a big way given al the talk of recovery around.
But that is exactly when a turn can happen,
when sentiment allows and complacency is entrenched.

Tomorrow;
Watch for wave ‘i’ down to begin making progress.
the target lies at 3904 after a five wave decline.

SILVER.

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SILVER daily.

Silver has reversed off an early new high now.
There is nothing to suggest wave (a) of [ii] is underway way yet,
I want to see a few days worth of declines before making a jump on the wave [ii] bandwagon.
I know we are close again,
but I need some price action to back me up on that hunch!

Tomorrow;
Watch for wave (a) to break below the previous corrective range at 24.50.