The current market is really confusing with Nasdaq at lows and Dow at new highs. Meanwhile, metals got slaughtered overnight – The GDX pattern may still be OK, but the gold and silver does not look good.
For a 3-day weekend, the level of activity in Nasdaq was unusually high – my best guess is we are near completing an A-B-C complex zig zag – where we MAY have 5 waves in this last C-wave. if so, there must be a rally later this week, otherwise, something more bearish is in play.
If the S&P market can manage to move up and follow the Dow’s lead – I have a feeling this next potential rally may be the last one – setting up for what might feel like a mini-crash in August into September around 2475-2485 with a target of 2300 ES.
The S&P MAY have had a 1-2-3-4-5 sideways expanding diagonal – which was extremely difficult to read, especially with the size of that 4th wave rally – which did not exceed the wave 2 high of 2447 ES.
Notice how the above 1-2-3-4-5 diagram matches the S&P formation below.
If the ES fails to move over 2430 convincingly – it could turn back down towards 2415-2418 before completing wave 2.
Nasdaq sold off the entire day into the close – not a single green hourly candle. I’m expecting a bottom to form before the next market open on Wednesday.
The gold chart opened already down a lot – it’s really testing its limit on the downside. Failure to hold the previous low – and ideally the first blue line – which is the low of today – would mean a drop below 1200 and likely below 1190.
So the next 24 hrs are critical. I would like to see GDX show some green – usually GDX leads the metals. If GDX can’t show some green soon, that may not be good for the metals to reverse. Currently it’s at 21.47.
Silver has had support in the 16 region, but testing it this m any times is not a good thing.
It’s possible to count the prior spike down in June as a b-wave – followed by a 4th wave c-wave towards 16.9 – and then this as wave 5 down, but I think it’s gone down a bit too far.
From Mid May to July – is a possible A-B- mountain – but that’s starting to stretch the 1-2 setup from earlier. The next 24-48 hours would have to see some green, otherwise this pattern will fall apart.
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