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Howdy folks.
We had the ADP employment figures today, and on the face of it the employment situation is looking good in the U.S.
But you know me by now - I never take things at face value!
I have a tendency to stick my head in behind the figures and look at the first order drivers of the headline figures.
And as far as employment goes, the driver for employment has always been a mix of credit change in the economy, and the corporate profit cycle.
If credit is accelerating in the economy, then employment tends to increase along with it.
And if corporate profits are in the expansion phase of the cycle, then employment will grow.
Let us see where we stand on both those fronts right now.
Corporate profit cycle:
The profit cycle has topped out now and is already on the down slope, next stop recession and corporate losses.
Non-revolving credit is also decelerating and in a cyclical down turn.
Revolving credit has also topped out and on the verge of contraction! looks like people are cutting up the credit cards again, or they are just not paying anymore!
All in all, the landscape for an improving employment situation is rapidly deteriorating.
The next bearmarket is getting underway according to the profit cycle, the credit cycle and the Wave count.
If you have a job, hold on to it tightly, because things are going to get rough over the next few years.
If you have a credit card, BURN IT!
Now down to business..........
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UPCOMING RISK EVENTS:
USD: Unemployment Claims.
EUR: N/A.
GBP: Services PMI.
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.
There was very little to work with in EURUSD today.
This week has been dead flat so far.
the sideways form of the corrective action this week suggests a contracting triangle wave 'iv'.
If that is correct,
We can still expect a further decline into wave 'v' at 1.2150 to complete the larger wave (c).
Tomorrow;
A break of 1.2238 will confirm that wave 'v' is underway.
We are close to completing this larger correction in wave [iv] now,
So eyes on for a quick turn around.
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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: completing wave (4) blue correction higher.
Long term wave count: decline in wave (5) blue, below parity
The price action so far this week has been the strangest I have seen in cable for as long as I can remember!
the larger pattern still suggests a final run up in wave (v) brown to complete the larger pattern.
So;
The best interpretation of the short term action
is a leading diagonal pattern in wave '1' grey.
Followed by an expanding flat wave '2'.
Wave '3' of 'v' should follow.
A break of 1.4199 will confirm that view.
Tomorrow;
watch for 1.4010 to hold
and a five wave rally in wave '3' to continue higher.
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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
USDJPY is again pushing back towards yesterdays highs
after correcting in a possible wave '2' pink overnight.
This pattern is again leaning heavily in favor of a large degree turn higher in wave '3'.
as suggested by the 4hr chart.
A further rally in wave 'iii' brown will also trigger a bullish MA cross-up on the 4hr chart.
The high of wave 'i' lies at 107.08,
A break of that high will be the first signal that wave 'iii' has begun.
Tomorrow;
wave '3' of 'iii' should carry above resistance with ease.
The initial target for wave 'iii' brown lies at 109.50.
Where wave 'iii' reaches 161.8% of wave 'i'.
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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: topped in wave (5)
Stocks opened 500 points lower this morning!
And have spent the day retrieving those loses.
The recovery off Mondays lows is still in a three wave form,
So it is very possible that the price is creating another lower degree impulse wave down off 24311.
if the price breaks 24311,
that will confirm the current short term count as correct.
The key level in the short term count lies at 23360,
A break of that level will confirm that wave (iii) of [iii] is underway.
Tomorrow;
Watch for a break of the wave 'a' high to complete wave (ii) grey.
Wave (iii) down may even begin tomorrow evening,
Once wave 'c' of (ii) is 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 [iii] above 1666.
Following a new high in todays early trading,
GOLD has again turned down in a possible wave 'c' brown to complete wave [ii].
Wave 'b' has completed a clear three wave pattern off Fridays lows,
A further break of 1322 will confirm wave 'c' is underway.
While the correction is completing on the short term chart,
Both the 4hr and daily charts are looking very bullish from a momentum perspective.
$hr MACD and RSI are both on the verge of a bullish center line break.
And Daily Momentum has completed a further higher low and is now in a full bullish divergence again.
Tomorrow;
Watch for a break of 1322 to confirm wave 'c' is underway.
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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
Well,
We got the decline into support at 62.24 as expected,
This now completes a five wave pattern to the downside in wave (C),
And a clear three wave pattern off the recent high at wave [i].
Wave [ii] now looks complete,
With that bullish spike higher this afternoon,
Wave [iii] brown may now be underway.
I have labeled the rise off todays lows as wave 'i' pink.
A corrective higher low above 62.06 will complete wave 'ii' and then we can look for a rally in wave 'iii'.
Tomorrow;
Watch for 62.06 to hold,
and that corrective higher low in wave 'ii' pink.
Crude could be in for another serious rally dead ahead,
With the target for wave [iii] in the region of 68.00,
Where wave [iii] reaches equality with wave [i].
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