Good evening to you folks.

God’s blessings to you all tonight.

Now Comes the Hard Part

John P. Hussman, Ph.D.
President, Hussman Investment Trust

Surveying the current condition of the financial markets, we presently observe a combination of still historically-extreme valuations, rising yet still only normalizing interest rates, measurably inadequate risk-premiums in both equities and bonds, and ragged, unfavorable market internals, suggesting continued risk-aversion among investors. In this context, it’s worth repeating what I’ve noted across decades of market cycles – a market collapse is nothing but risk-aversion meeting an inadequate risk-premium; rising yield pressure meeting an inadequate yield.

EURUSD.

EURUSD 1hr.

EURUSD 4hr.

EURUSD daily.

I am not satisfied that we have completed wave (iii) even though EURUSD turned higher today.
I can only wee a three wave decline in wave (iii) so far.
And this requires another leg down to complete a five wave decline.

I am now viewing the current action as a possible rally in wave ‘iv’ of (iii).
Where wave ‘iv’ is an expanded flat correction.

Tomorrow;
Wave ‘v’ of (iii) should fall to a new low below 0.9535 to complete.

GBPUSD

GBPUSD 1hr.

GBPUSD 4hr.

GBPUSD daily.

The pattern in cable is turning positive again this evening after a solid higher low was formed this morning.
The price has now complete a three wave correction in wave [ii] at todays lows,
and now we should see a five wave rally into wave [iii] over the coming week.
Wave (i) of [iii] is approaching the high at 1.0931 now.
And I suspect that high will mark the top of wave (i) tomorrow.
The pattern should create another higher low in wave (ii) blue over the coming few sessions.
And then wave (iii) of [iii] is expected to begin next week.

Tomorrow;
Watch for wave (ii) to hold above 1.0538 at the wave [ii] low.
The setup should lead to an extended rally next week in wave (iii).

USDJPY.

USDJPY 1hr.

USDJPY 4hr.

USDJPY daily.

USDJPY has drifted sideways today which fits the current pattern in wave (iii).
And as long as the action looks corrective to the downside,
I will stick with the idea that wave [v] is not complete yet.

the correction today is viewed as wave ‘iv’ of (iii).
Wave ‘v’ should carry back above 145.90 again to complete.
And then wave (iv) and (v) will be left until next week to complete.

Tomorrow;
141.75 marks the hard cut off point for this wave [v] pattern.
I want to see wave ‘v’ of (iii) push higher tomorrow and break that recent high at 145.90 to complete.

DOW JONES.

DOW 1hr.

DOW 4hr

DOW daily.

The rally today has ruled out last nights interpretation,
but the action has opened up another possibility for wave ‘iii’ down.

I have shown wave ‘3’ of ‘iii’ complete at Tuesdays low.
And now this rally is viewed as wave ‘4’ of ‘iii’.
The market has reached back to the highs of the previous shoulder within wave ‘3’ today.
and I do want to see this wave ‘4’ rally complete soon without risking the wave count completely.
If the price breaks back above 30450 at the wave ‘1’ low,
then I will be forced to reconsider the main count.

Tomorrow;
Watch for wave ‘4’ to complete at todays highs or close by.
Wave ‘4’ can continue sideways for another few days to create a larger three wave pattern.

But if wee another decline tomorrow to break 28825 at the wave ‘3’ lows,
then I will consider wave ‘5’ underway.

GOLD

GOLD 1hr.

GOLD 4hr.

GOLD daily.

The action in gold was positive today and there is a chance that the correction is finally over at this weeks lows.
I am not quite on board with that idea just yet though.
I think there is a more convincing short term count in play now for wave (v) blue.
The ending diagonal idea is still my favorite count for wave (v).
And in this context,
this weeks action can be viewed as an expanding flat correction in wave ‘iv’.
And wave ‘v’ is shown as another three wave pattern yet to come .
the wedge pattern should complete in the area of 1585 if this count holds true.
We should know by tomorrow evening either way.

Tomorrow;
Watch for wave ‘c’ of ‘iv’ to top out and reverse into wave (v) blue.
This count will be confirmed if the price breaks below 1615 again.

CRUDE OIL.

CRUDE OIL 1hr.

CRUDE OIL 4hr.

CRUDE OIL daily.

I am forced to rethink the short term count in crude tonight.
the overall thesis remains the same,
that is we should see a sustained decline into a third wave start pretty soon.
I have reviewed the count for wave (i) and (ii) of [iii] today though.

The rally today is now viewed as wave ‘c’ of (ii).
And that rally has just hit the 38.2% retracement level of wave (i) today at 81.32.
The 50% retracement level lies at 82.90,
so I am happy for wave (ii) to close out in this range.

If this count is correct,
we should see wave (iii) down begin over the coming days.

Tomorrow;
Watch for wave (ii) to top out tomorrow in this Fibonacci range.
A break below the wave ‘a’ high at 79.33 again will signal wave ‘i’ of (iii) has begun.

S&P 500.

S&P 500 1hr

S&P 500 4hr

S&P 500 daily.

It is a similar story for the S&P tonight.
The rally today has changed the way I am looking at the internal pattern for wave ‘iii’ pink.
But nothing else has changed here.
I think this market is still in a very dangerous place here.
and we could easily see a clear acceleration lower in wave (iii) over the coming days as wave (iii) closes out.
I will remain with this view until the action proves otherwise.

Tomorrow;
The rally today is either all, or part of wave ‘4’ of ‘iii’.
The market has only reached back into the top of the range this week.
And if this count is correct,
we will see a new low in wave ‘5’ of ‘iii’ by the end of this week.

Watch for wave ‘4’ to top out here very soon.
And a break back below 3600 again will signal wave ‘5’ is underway.

SILVER.

SILVER 1hr

SILVER 4hr.

SILVER daily.

There is a possible alternate count brewing for wave ‘4’ red after todays rally.
you can see this count on the 4hr chart.
Even if this count proves correct for wave ‘4’,
the price is set to fall again into wave ‘5’ in a week or so anyway.
So there is not much good news to take from todays rally.

On the main chart I have shown a new count for wave [i] and [ii] tonight.
this is the alternate view I was suggesting over the last few days.

The rally in wave [ii] will allow for a three wave push towards 1950 again this week.
And then a complete reversal into wave [iii] next week.

Tomorrow;
Watch for wave (b) of [ii] to fall again into the 1850 level in three waves.
A break of 17.95 again will signal wave [iii] is underway.