This past week we had Fed Wednesday near the market high on Wednesday – the market peaked around 11am a few hours before the Fed meeting and then proceeded to drop into the close.
The next day saw a pop up – in the morning – a B-wave – where we exited a portion of our position – in hind sight should have exited all at that point – though by this point we exited most of our position. What followed next was C -wave down – followed by a short covering rally into triple witching options expiration on Friday.
At this point, I’m expecting range bound movement – and much of next week’s actions will be dictated by whether financials participate in the rally or not.
The XLF chart is not looking great – and while there is a set up for it to move up, if it does not, it may stall out the rest of the market and we could roll over.
So a struggle to get over 2790 ES may result in a push back below 2765 ES.
However, if the market can show strength Monday or Tuesday – then it is likely that we can reach new highs by end of the week.
The dow has been lagging – and one of the largest holdings in the Dow is Goldman Sachs (GS) – also a component of the XLF. Remember the Dow Jones is a price-weighted index – so a high priced stock like Goldman Sachs carries a greater weight on the Dow Jones index than similar market-cap- stocks.
Notice we have the classic Elliott wave pattern 1-2-3-4-5-a-b-c —-happening twice in this Dow Jones set up. The difference is the amount of vertical movement is a bit muted compared to the other indices.
The Nasdaq has been strong – but tech may be at risk of a pull back next week – a bit more so than the other indexes in my opinion.
Gold has been struggling to get over 1380 GC resistsance level for many years — at this point – I think it’s clear enough to see that we have a failed 3rd wave breakout set up – and this should likely mean we should be heading further down.
For the remainder of 2018 – I remain bearish – I just don’t know how long it will take, but it seems clear the upside is limited after multiple failed attempts to the upside.
Combine this chart with the chart of the US dollar – which has a set up to the upside.
Interestingly, the US dollar is setup with a I-II set up. Initial strength off that low is favorable for further upside.
Some real estate markets have blamed a strength in the US dollar for preventing foreigners frrom purchasing real estate in the US – particularly in places like Miami where a lot of money comes from South America – where they’ve been having lots of currency issues.
I think the US dollar will continue to get stronger, assuming this pattern plays out, so foreign appetite for US Real estate may dampen in the immediate future, in my opinion.
For smaller cryptos, I’ve been using Binance – though I’ve been having issues verifying my identity with them. So far it seems to be one of the better platforms for getting exposure to various cryptos.
Robinhood has $0 trade commission for stock and will soon have it for cryptos.
Sign up to become a member to access to premium videos and you will get the insights you need to make more educated trade decisions. And yes, you’ll get to join our Whatsapp mobile text alerts for weekly trade recommendations.
|Get Trade Alerts Now|
Need assistance with getting approved for options by your broker?