Leading into Friday morning’s jobs number, the Dow , Russell, S&P, gold, and silver had all been in down trends since the Trump speech for some 5-7 straight days.
The Russell, in particular, has not advanced since November – when it initially led the Trump Rally – but has made no net advancements since then for the past 4 months. Instead, it pulled back some 7 days in a row, something that has not historically happened in long time.
Going into Friday’s Jobs number, the markets appeared to finally reverse overnight — yet during the day on Friday after the Jobs number, the market simply dropped once again. Russell even made a new lower low.
Meanwhile, gold and silver had been dropping precipitously beyond all kinds of support without any bounce of any kind — until — maybe after the jobs number on Friday. But even then, it spent most of the day pulling back.
There are indications that the metals may have bottomed and momentum was starting to reverse by end of the day.
This coming week, there’s a Fed Day on Wednesday.
Last time, I presented two possibilities – that we hit pink 4th wave support and might continue to go towards pink 5 — or the bearish blue a-b-1-2-3-4-5 pattern down.
It turns out the pink pattern was wrong and the blue one was correct — though the blue one appeared as a series of a-b-c zig-zags in between each of the a-b-1-2-3-4-5 as labeled in the above chart.
So if we follow the blue count from above into what actually happened below — there *should* be the completion of 5 waves. The reversal wave a was much quicker and bigger than I expected — and the b-wave drop happened most of Friday. We should be consolidating between 2360 and 2370 into Monday morning – with a possible rally in the afternoon, ideally over 2380ES.
However, if we do get there and the market starts to struggle, we may turn back down. It does not seem we will be able to immediately get over 2400 especially with the size of the b-wave pullback on Friday.We may just get a b-wave high before testing the 2340 ES region.
The russell is the bane of my existence
Zooming out – we have almost never had so many consecutive red days on the Russell – which makes me think this has to be a larger degree wave2drop. Whether this is only A of that A-B-C wave 2 drop – or whether all of wave 2 is completed, I don’t know, but my expectation is we should revisit the 1390-1400 region keeping in mind that it could potentially be a very short visit there.
While most other indices (Dow, Russell, S&P) were dropping, the Nasdaq held its part by not falling – in fact, it’s near the prior highs and could be coiling for higher.
Gold has been taking beating – and the gold miners have been almost destroyed. The typical region for gold to have stopped should have been near 1212 GC, yet gold extended with multiple sets of 4-5’s down below 1200.
It was not until Friday’s 8:30 report — technically just a few hours before it – that gold temporarily bottomed and started consolidating. Whether it turns back down, I don’t know – but I am seeing extensions into a catalyst that could potentially turn things around. Of course, with Wednesday’s Fed decision, this may be a short-lived rally.
The expectation is the Fed has increased likelihood of raising interest rates – probably partly the reason gold and silver have been hammered. Maybe the Friday jobs number will change people’s expectations?
4th wave resistance was at 17.63 — but silver fell further than I expected. At the moment, gold seems to be leading the recovery somewhat.
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