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Good evening all.
The market spent the day trying to figure out what just happened in stocks!
There was a whole lot of red accounts this morning after the thrashing that took place yesterday.
Lets take a step back for a minute.
As students of the markets,
we few, are not common among people in general.
We elliott wavers,
Are even fewer!
We look at market action with a timeline which stretches from decades
right down to minutes.
And we know that cycles of valuation rise and fall accross multiple timeframes.
Most people have a very short time line by which they regulate their actions in life.
What happened for the last few years
is simply projected out into the future,
no questions asked.
Or deviations planned for.
On the other hand,
We can visualize a scenario where
a market which has risen for 9 years non stop,
and quadrupled in nominal value.
can turn on a dime and drop for another 5 years,
And lose 90% of its nominal value.
This is just natural market action to me,
So much so,
that it is my base line scenario!
The reason most people blunder in their approach to markets is simple when viewed in these terms.
They are alway the most bullish at the top,
And always most bearish at the bottom.
because they project the past into the future.
Instead of expecting change as the norm.
In general,
People are still bullish despite the last weeks action.
They do not expect things to change.
In fact many will use this moment as an opportunity to double down and buy the dip.
Thye are dead wrong! and that will be the move to kill them.
This is the headline on CNBC today - "The stock market correction has arrived in Europe"
Im afraid we are going to experience more than a simple correction this time!
even a simple mean reversion to normal long run valuation averages averages,
will bring this market down by 60%.
But the market will not stop at 60%!
There are big moves afoot in the markets.
And a generational shift in valuations is about to get underway.
The elliott wave will signal when that shift is underway,
And we are close to that moment now!
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UPCOMING RISK EVENTS:
USD: Crude Oil Inventories.
EUR: n/a.
GBP: Halifax HPI m/m.
JPY: n/a.
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EURUSD
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: long term bearish
Wave Structure: Topping in wave [B] black.
Long term wave count: lower in wave [C] black.
EURUSD met the lower trendline today at 1.2314.
from there, the price has rebounded in an impulsive fashion.
I am looking for a five wave pattern to the upside in wave (iii) brown to begin off the low of 1.2314.
Wave (iii) brown should reach a minimum target at 1.2627,
Where wave (iii) will equal wave (i) in points traveled.
For tomorrow;
Watch for a higher low to form in wave 'ii' pink.
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GBPUSD
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: short below parity in wave (5).
Wave Structure: continuing impulsive structure to the downside in wave (5)
Long term wave count: decline in wave (5) blue, below parity
Despite an early decline today the price has rebounded favorably.
I have labelled todays rise as wave '1' grey.
Wave '2' should complete tomorrow,
And wave '3' should do most of the heavy lifting higher into the minimum target at 1.4345.
Wave 'v' should break that wave 'iii' high at the very least.
For tomorrow;
the price must remain above 1.3835 as wave '2' completes.
wave '3' will be confirmed with a break of the wave '1' high.
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USDJPY
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: LONG
Wave Structure: rally in wave [C]
Long term wave count: wave [C] is underway, upside to above 136.00
Fridays high at 110.47 has now gained significant importance.
A break of that level will renew the short term bullish wave count
The price reached lower this morning
But it did not break the low at 108.27,
So the bullish interpretation still stands for now.
If we get a rally above 110.47 tomorrow,
That will signal that wave 'iii' brown has begun.
For tomorrow;
108.27 remains my focus in the short term.
this level must hold to remain bullish.
A break of which will trigger the alternate wave count.
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DOW JONES INDUSTRIALS
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: market topping process completing
Wave Structure: Impulsive 5 wave structure, topping in an all time high.
Long term wave count: topping in wave (5)
The DOW staged a comeback this morning after an initial decline at the open.
The cash market reached a low of 23792 this morning.
And the market rallied over a 1000 points today alone!
Rational valuation?
I think not!
I have shown a possible ongoing three wave pattern off the low as the preferred count.
The likely targets are between 25234 - the 50% retracement.
And 25507 - the previous 4th wave.
If the price reaches into these levels and reverses lower again,
Then we will have a valid bearish elliott wave signal on our hands.
Tomorrow;
Watch for wave 'c' to continue into 25234 to complete.
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GOLD
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: Long to a new all time high above 1827.
Wave Structure: Impulse structure to a new high.
Long term wave count: wave (3) above 1666.
GOLD is now in range of the initial target for wave [ii] green
which was set at 1319 and change.
This is where wave (c) reaches equality with wave (a).
the low of the day so far reached 1320.85 cash.
Further support lies at 1309, the previous wave 'iv'.
So,
It is now time to look for a return higher in the beginnings of wave [iii] green.
Tomorrow;
Watch for an initial spike higher to begin wave 'i' pink.
A break of 1334 will signal that wave 'i' has begun.
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U.S CRUDE OIL
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[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]My Bias: topping in a large correction wave [4].
Wave Structure: Double combination higher in wave [4] red.
Long term wave count: wave [4] target $63 - $70
Todays low in crude oil came in at 63.12,
This was mere pips away from invalidating the bullish wave count.
The rise off the low looks impulsive,
And I have labeled it as wave '1' and '2' of the larger wave 'i' pink.
The rally in wave 'i' must come quick now to take the price out of the danger zone.
The bullish count will not be confirmed until the price breaks 66.13, the previous wave 'b'.
Tomorrow
Watch for key support to hold,
And a rally higher in wave '3' of 'i'.
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