Good evening folks,
I know that a whole lot if you expect me to throw in the towel tonight, thinking maybe its time to just get on board with the greatest economy ever narrative!
Sorry to disappoint you all, I am not there at all!
Today we got the biggest surprise jobs number in history, and there are sooooo many holes in the so called ‘data’ that you could sieve rocks through that report.
My first thoughts were; Is anyone else going to call Bullshit on this?
Of course there was no shortage of input from every side.
According to the BLS’s Birth/Death model which is used to adjust the raw payrolls data for estimated new business openings and closures, a record 345K new jobs were created due to new businesses opening in a month when – we will repeat again – the US was largely shut down!
A huge hole filled up by dentists!
According to the American Dental Association, there are just over 200,000 dentists in the US. So how surprising it must be that at a time (as a reminder the survey week was from May 10th through May 16th) when most dental offices across the US were still shuttered (and in places like California they still are), a record 245K dentist office jobs were added, effectively undoing half of all the April job losses in this job category.
http://market-ticker.org/akcs-www?post=239456
Note a few facts from the internals:
- This is the largest single-month household-survey, unadjusted increase I have in my data set going back to 1999. +4m, more or less.
- Half came out of the NILF (not in labor force) number. In 08/09 those adds were “sticky”; this time, not so much.
- The total permanent loss of jobs, by the data, is ~2m. That is, if this data is to be believed, more than 90% of the losses in March and April were temporary. My informal view (given businesses forced-closed and not reopening) is that this is wildly optimistic but it’s what the data represents today.
Optimistic day traders piled in;
https://www.zerohedge.com/markets/bankrupt-hertz-stock-soars-100-relentess-flood-retail-daytraders
As a reminder this is $500 million in equity value that is absolutely worthless since the company has no choice but to equitize its debt and will wipe out its pre-petition equity, yet all of this is lost on retail investors who keep piling into the bankrupt name expecting even more “greater fools” to buy their stock at higher prices.
“We are seeing a lot of bullish options speculators, and I think the ‘message board flow’ is playing a part,” he said, referring to retail speculation typified on the Reddit forum
The reality is more like this:
EURUSD.
EURUSD 1hr.
EURUSD 4hr.
EURUSD daily.
1.1383 marks the high of the trade today in EURUSD.
I have to be careful now,
because that level is getting a bit too close for comfort to the invalidation level above us now.
The 100% retracement level lies at 1.1492 at the moment.
A break of that level will rule out the short term count.
So,
next week I want to see a sharp reversal lower off this high to begin wave ‘3’ down.
The price did fall today which is a welcome development for sure.
But more is needed now to get us out of the danger zone.
Monday;
watch for a reversal lower in wave [i] down to begin.
if we see a drop below 1.1000 next week that will signal wave ‘3’ down has begun.
We should see a bearish lower high develop first.
GBPUSD
GBPUSD 1hr.
GBPUSD 4hr.
GBPUSD daily.
Cable pushed into the upper trend line today to complete wave (iii) of [c] of ‘C’.
The final rally up in wave ‘v’ of (iii) completed as an ending diagonal.
The price has dropped off the highs this evening again,
and this should be the beginning of a correction in wave (iv) at least.
There is an outside chance that we may have a top in place for wave ‘C’ already.
If a large impulsive decline happens off this high,
that will favor the alternate idea.
For the moment,
I am allowing for another correction in wave (iv) and rally in wave (v) to complete wave ‘C’ to develop first.
Monday;
watch for wave (iv) to begin with a drop back below 1.2500 again in wave ‘a’ of (iv).
USDJPY.
USDJPY 1hr.
USDJPY 1hr.
USDJPY daily.
Todays rally pushed USDJPY out above the the upper target level at 109.38 again.
It is hard to say if this rally in wave (iii) is complete just yet,
but the move over the last week does look over extended to me.
So I think it about time that we see a correction again in USDJPY,
possibly in wave (iv) blue as shown.
Monday;
Watch for the initial drop in wave ‘a’ of (iv) to begin.
I expect wave (iv) should find support at the previous fourth wave lows at 108.60 again.
DOW JONES.
DOW 1hr.
DOW 4hr
DOW daily.
I am wondering if I am the only bear left in the room now,
It’s getting lonely at this party of one!
The DOW raced higher in the overnight futures trade,
and then it took off completely today after the magic jobs number came out!
I have my suspicions that a certain number of people knew what was coming down the pipeline here.
And the bought heavily over the last few sessions.
That is evident in the volume spike earlier this week.
No politician-insider would ever do that now would they?
I am calling this a blow off top for sure.
And I am on the verge of switching the main wave count up by one degree now
as I have spoken about over the last few weeks.
There is pain coming when the market is repleat with absolute abandon without any basis whatsoever.
I know that I have failed miserably over the last month in calling a top in wave (B) that has not appeared.
The wave count worked well in calling the top back in February,
It then worked a treat in calling a low in late march.
But now,
the top that I know is overdue,
just fails to materialize week after week.
Even as the foundation under this rally is completely obliterated.
The retail FOMO trade has hit epic proportions.
Suddenly, the guy on the street corner is 100% correct that the market is going to rally forever.
Good thing he bought those Hertz shares last week,
that one looks like its going to the moon!
Next week;
Call me a fool for thinking that this blind rally is the end of the road.
I am looking down AGAIN next week.
GOLD
GOLD 1hr.
GOLD 4hr.
GOLD daily.
Gold hit the lower trend line today with a sharp move off the high at wave ‘iv’.
This move should bring wave (c) of [iv] to a close soon enough.
A three wave pattern is in place off the 1764 highs now.
And the price seems to be finding support in the area of the previous fourth wave also.
The wave ‘iv’ high created yesterday also offers us an initial target for the next rally to hit.
So mark 1721 as the first signal level for a turn up into wave (i) of [v].
Monday;
Next week I will focus on the beginning of a turn higher into wave (i) of [v].
Wave (i) will be confirmed with a break of 1745 again.
CRUDE OIL.
CRUDE OIL 1hr.
CRUDE OIL 4hr.
CRUDE OIL daily.
Crude was bid higher in the optimism trade today.
The rally has opened up another pattern for wave (iv) and (v).
This involves a triangle in wave (iv) rather than a running flat as before.
And now a simple five wave rally in wave (v),
where wave ‘iv’ of (v) is a triangle as shown.
I do expect this hope trade to disappear pretty soon,
the rally in wave ‘C’ has now almost filled the gap on the 4hr chart.
And the price is now almost up to the upper trend channel line again.
Reality has been disregarded completely for the last few weeks,
but the reality cannot be ignored forever.
Monday;
Wave ‘C’ will complete soon.
And when it does the next leg down will begin with a bang.
The initial target area is the 30 handle for wave ‘1’ down.
As usual,
we need to see a five wave decline to kick off the next leg.
S&P 500.
S&P 500 1hr
S&P 500 4hr
S&P 500 daily.
Why is anyone selling at all this evening?
Is it because the doorway out of a market rally actually gets narrower,
the closer you get to the end of the rally.
The vertical move today in the S&P took us up above the 3200 level again.
So we are now a mere 200 points off the all time high.
This rally has to stop now,
so I want to see a hard negative week next week,
its that simple now.
As I mentioned earlier,
I never thought that the market would regain these levels in wave (B) of [A].
But it could, if this rally is actually one degree higher than I thought.
If this is wave [B] that we are experiencing now,
then wave [C] is ahead of us,
and that decline is will bring with it the mother of all depressions.
I hate to be the one pointing out the absolutely obvious here,
but the late February all time high was unsustainable on a mediocre economy.
The current valuations are horrendously deep in fantasy on a collapsing economy.
But that is where we are.
Fantasy land in delirium with day trading unemployed smartphone bagholders levering up to buy calls on bankrupt companies.
You could not make this up really!
Next week;
I am looking for reality to bite.
Whoever front-ran this market will have to get out soon.
Wave [C] is coming,
And not even Jerry Powell can bail out this next move down.
SILVER.
SILVER 1hr
SILVER 4hr.
SILVER daily.
Silver has dropped today also in wave (c) of [a].
So far, the internal pattern in wave (c) is a developing five wave move.
With wave ‘iii’ of (c) finding a low this evening.
The price has corrected slightly higher again today in wave ‘iv’ pink as shown.
This should be followed by a spike lower in wave ‘v’ of (c) early next week.
This action will complete three waves down in wave [a] and then I will look for a correction in wave [b] over the next week.
Monday;
It looks like we still have some more pain to undergo in wave [c]
before a new longer term buying opportunity arises in a few weeks time.
Watch for wave [a] to find a low on Monday.
I have marked 16.80 as the target to complete wave [a] of ‘2’.
I pray you have a wonderful and peaceful weekend ahead.
GOD Bless you all.
God’s speed,
enda.