There are no changes to our analysis from the overnight action.
The market should be in the final micro moves to complete the rally off the June lows.
Arguably, a larger advance off the December low and even the 2009 lo completing as well.
A weekly SPX below from January 2018 shows a close only trendline from the Jan 2018 closing high is being tested.
A shorter close only trendline from the April/May tops converges in this region as well.
My interpretation is this is either a large B wave following last falls A wave decline to be followed by a vicious C wave sell-off with 5 waves up off the December low completing.
The alternative, bullish case is that the rally from January to May was a wave 1 advance followed by a wave 2 correction into early June and the SPX has embarked on a 3 wave advance.
Cycles suggests a turndown from a July high and the bearish case is a strong probability.
It should be easy to tell. Momentous momentum through 3025-3040 would be consistent with the bull case.
A decline below 2950 indicates a bearish resolution.
Sometimes it helps to get a handle on ones emotions when an item is making a big picture high or low by turning the chart upside down.
Does doing so make you bullish or bearish?
Assuming a top in this region, a 50% retrace of the 274 point range from the June low ties to 2866 and the 20 week moving average.
On the Square of 9, the number 274 squares out with May 1st, the prior swing high.
So we have a possible square out with the range pointing to the May high underpinning the notion we are at resistance.
July started with a gap up from the 2940 region. 2940 ties to the 20 day moving average currently.
A decline this month back below this gap and the 20 day m.a. is a warning that a test of the June lows are in play.
I connected the February/April 2018 lows and extended this Ghost Trendline forward (magenta line).
Notice that it was a break of this trendline that perpetuated the December waterfall.
Currently that trendline ties to the June low.
So the June low is the Uncle Point of the current structure.
Below 2720 ish implies a push to the December low or lowe3r.
Interestingly the 2729 region and the Ghost Trendline level in June aligns with the Gann Zero Point or March 21st, the natural beginning of the year.
This underscores the significance of the June low and the range from the June low to whatever high we MAY make in this timeframe.
Gold ripped out of a consolidation yesterday.
A monthly GLD shows the breakout over a 5 year inverse Head & Shoulders formation.
From the late December 2015 low to the 127 Neckline we get a projection to 154.
Notice that 154 ties to the bottom of a large consolidation and the breakdown in 2013.
So there is some golden symmetry on the table.
My interpretation is a large Wave I up into July 2016 followed by an A B C decline for a Wave II low last summer.
If that is correct we are in a powerful 3rd of a 3rd wave advance.
This is consistent with the idea that fast moves come from 3rd higher lows with May being a 3rd higher low.
As mentioned earlier this week, if so, we should be on the verge of a breathtaking rally in gold.
We reloaded a long in GDXJ on Tuesday.
Below is a monthly GDXJ that shows two inverse Head & Shoulders operating.
It looks like GDXJ is now clearing the smaller Neck which projects to 46.
This is in the region of a larger Neckline near 50.
Clearing 50 gives a projection toward 83.
Notice the symmetry of the breakdown from the 83 region.
The geometry ‘proves’ the potential of the structure.
Interestingly a trendline off the 2011 tops converges this summer with the 50 Neckline.
The presumption is GDXJ is on the fast track to 45-50.
Again, turn the chart upside down. It looks like a ‘crash’ is on the table…which conversely means a whoosh to the topside.
Conclusion: There is something out there that points to a big move in the SPX and gold.
I don’t know what that is but can’t help but wonder if it involves DB which is the largest derivative player on the planet.
This week they tried to offload their debt and fired thousands of employees.
I can’t help but recall that things were ‘fine’ at Bear Stearns early in the week before they went belly up.
Ditto Lehman Brothers.
Is it possible that DB is why the Fed is ‘mysteriously’ calling for a preemptive rate cut?
Strategy. The usual suspect growth glamours are mixed. Some like TEAM that we sold yesterday near the open for a 7.80 gain followed through nicely from a breakout but reversed yesterday.
EHTH which we also sold near the open for 6 pt gain also reversed.
TWLO and MDB also reversed from Opening Spike Highs.
Risk on appetite prevailed in CRWD flagged on our private twitter feed and GH which subscribers took long on Wednesday looks like it’s coming out of a big picture Cup & Handle.
In the IPO arena, PSNL caught a bid and looks set to turn up while RVLV may carve out another pullback opportunity after our sale on Monday’s spike.
The bottom line is it has been a great environment for swing trading and Hit & Run versus trend trading (apart from the precious metal miners).
This is not surprising as many speculative names are extended.
We’ll continue to buy the pullbacks in strongly uptrending names as they crouch and sell the rallies in weak names as they try to stand on their tiptoes.
Pos GDXJ, GOLD, AG, AEM, WPM, SBGL, AU, GH, CRWD