Good evening folks, and may the Lords Blessings fill your life today.

One chart which hit me today is this from John Hussman.

Air-pockets, panics, and crashes

It’s never a good thing when overvalued, double-counted chickens are being purchased with borrowed money. With margin debt at the highest level in history relative to GDP, with the most extreme valuations on record, with bullish sentiment at lopsided extremes, with the S&P 500 pushing its upper Bollinger bands at every resolution, with divergence and deterioration in our measures of market internals, and with the S&P 500 strikingly overextended relative to widely followed moving averages (e.g. 200-day), I believe that the market is at clear risk of a vertical “panic” or “air-pocket” much like we observed in 1987 and 1998. Neither of those panics was associated with a recession. They were just points where overextended investors attempted to reduce their leveraged positions into a market where the bids were insufficient to absorb the selling without large price discounts.

EURUSD.

EURUSD 1hr.

EURUSD 4hr.

EURUSD daily.

EURUSD has bounced slightly off Fridays lows to create a small ‘b’ wave lower high.
Wave ‘b’ can continue sideways over the next few days,
but the retracement should not go much higher than todays highs overall.
Wave ‘c’ of (a) should head lower again over the coming few sessions.
That will complete three waves down to begin wave [b].
At this point is looks like this week will be a sideways to nowhere type of trade as wave (a) completes and wave (b) retraces higher.

Tomorrow;
Watch for wave ‘b’ to complete a three wave correction to a lower high below 1.2148.
Wave ‘c’ should then fall into the 1.1900 area again.

GBPUSD

GBPUSD 1hr.

GBPUSD 4hr.

GBPUSD daily.

Cable retraced higher than the wave count expected today.
While the previous count is not invalidated by todays action,
I think it is enough to suggest another approach here.

I am looking at a triple combination pattern here for wave ‘D’.
Wave [a] and [b] have already traced out complicated three wave internal patterns.
And now wave [c] should do the same!

The decline off the wave [b] high is a three wave pattern into Fridays lows at wave (a).
and now I am expecting a three wave recovery in wave (b) as shown.
Then wave (c) will come in a break to a new low with a five wave decline.

Tomorrow;
watch for wave (b) to work sideways and hold below 1.40 over the next few sessions.
Wave (c) down will begin with a break of 1.3797 at wave (a) later in the week.

USDJPY.

USDJPY 1hr.

USDJPY 4hr.

USDJPY daily.

Wave [i] did not manage a full retracement of the previous wave [c] decline.
A break of the wave [b] high at 109.96 would manage that.

But the overnight new high completed a five wave rally in wave (v),
and now wave [i] up is done at 109.69.

The price dropped sharply off that high in wave (a) blue as shown.
And wave (b) should now rise in three waves wo complete below 109.69 again by midweek.
And then wave (c) will complete three waves down with a drop below 108.50 .

Tomorrow;
Watch for wave (b) to begin to work higher in a corrective three wave pattern tomorrow.

This bullish pattern will only be invalidated with a break of 107.47.

DOW JONES.

DOW 1hr.

DOW 4hr

DOW daily.

The market has failed to hit a new high today.
I have switched to the alternate count nonetheless.
the rally today broke higher than 34160 and with that the triangle pattern in wave ‘iv’ was confirmed.

The count now calls for a new high in wave ‘v’ of (c) to complete this alternate five wave pattern.
and if that happens,
then I will look again for a reversal pattern off the highs.

It is interesting that the market has spent the last three weeks just hovering around the (a) = (c) target level for wave [v].
That level has formed an insurmountable obstacle so far.

Apart from the alternate count triggering today,
the overall pattern for wave [v] as a three wave rally within an ending diagonal is still intact.
So,
I will continue to use that base line ending diagonal to track this market.

Tomorrow;
Watch for wave ‘v’ of (c) to hit that final high and then reverse into wave (i) of [i] to the downside this week.

GOLD

GOLD 1hr.

GOLD 4hr.

GOLD daily.

Much like the stock market,
gold is in its final throws of the latest rally phase.
Before we see a big reversal into a new low for wave [v] of ‘C’ of (4) later this month.

The price rallied today and hit a double top with the recent 1798 high.
This action has triggered the alternate count for wave (c),
which involves a five wave rally in wave wave (c) as shown.

Gold should hit 1800 to complete wave ‘v’ and then wave [v] will be set to begin off that high.

I can see that wave ‘v’ pink has not quite completed a five wave pattern off the wave ‘iv’ low from last Thursday.
So one more high will do just that.

Tomorrow;
Watch for wave (c) to complete with a pop above 1798.
a reversal back below 1755 again will signal wave (i) of [v] has begun.
And I think we will see that before the end of this week.

CRUDE OIL.

CRUDE OIL 1hr.

CRUDE OIL 4hr.

CRUDE OIL daily.

We have a possible ‘i’ ‘ii’ pattern in place off last weeks highs at 65.41.
Wave ‘i’ down traced out a picture perfect five wave pattern off the high.
There is a clear lower high in place now also in wave ‘ii’.

Wave ‘ii’ may not be complete yet,
as it might develop into a more complex pattern over the coming days.

With that said,
there is enough pattern in place right now to prepare for wave ‘iii’ down to begin.

Tomorrow;
Watch for wave [ii] green to hold at 65.40.
Wave ‘iii’ of (i) down must break 62.90 to begin.
and then decline into support at 60.50.

S&P 500.

S&P 500 1hr

S&P 500 4hr

S&P 500 daily.

A week trade today to re-inforce the fact that every good news story possible is already built into the price here.
The lions share of the S&P 500 members have already reported their q1 earnings now,
and blow out earnings have been met with a big sigh of relief and exhaustion!

The major point that is missed here is this,
corporate earnings have been padded to the tune of trillions over the last year with govt handouts and fed printing.
Without the handouts,
they would all be bankrupt!

Now the feeding trough is close to being pulled,
this excess earnings spigot is about to be turned off.
Then corporations and people will actually have work and pay for products from surplus again.
Rather than the paycheck subsidization / subsidized loan programs etc that has been the norm over the last year.

At best,
this will lead to stagnant revenues and earnings,
at worst,
there will be an almighty hangover!

Tomorrow;
As for the short term pattern,
until we have a definite move in either direction the current pattern stands.

SILVER.

SILVER 1hr

SILVER 4hr.

SILVER daily.

Just like the gold market, silver put in a solid rally today to break out of the drift lower over the last week.
This action has not changed my mind on the overall pattern.
I am still waiting for wave [c] of ‘B’ to complete,
and then wave ‘C’ down will be a shocking dive to quench the bullish ness that currently has gripped the metals in the short term.
I will be very interested in silver when wave ‘C’ is done.
Until then I think we are witnessing a bull trap.

At todays high wave ‘B’ has managed to retrace a full 50% of the previous decline in wave ‘A’.
We are in the ball park now for wave ‘B’ to top out and wave ‘C’ to begin.

Todays rally is close to completing a five wave pattern in wave (v) of [c] of ‘B’.
And I have labelled this top as wave ‘iii’ of wave (v).

All in all, this pattern is very full now.

Tomorrow;
Watch for wave (v) to complete this week and then price should fall back below 25.68 to begin wave [i] of ‘C’.