AUS 200
FA Update for May 29S&P500 (SPX)
The breakdown of the rising wedge which was posted a few weeks ago, looks to be confirming to the downside for further momentum which displays a clear risk-off sentiment still in play (if not even close to being priced in).
What's risk off? "Investors tend to change asset classes depending on the perceived risk in the markets. For instance, stocks are generally seen as riskier assets than bonds. ... When stocks are selling off and investors run for shelter to bonds or gold, the environment is said to be risk-off." -Investopedia
My downside target for the SPX is the 200 MA around 2775. With that being said, interesting things can happen around the 200 day MA. You can expect some pretty big moves, as this is THE MOST INFLUENTIAL MOVING AVERAGE FOR THE S&P. It's simply because it's so widely watched. It's the only moving average I will give respect to when comparing technicals to fundamentals. This week will be interesting. I'm not bullish on the S&P at the 200 MA, as I feel this will be a big sell-stop level for hundreds of billions in equity in open orders (source: bloomberg terminal). I will say, that when you get to around the 200 MA, you need to be nimble, as things can get dicey.
DOW (DJI)
The Dow broke it's 200 MA, broke, and is hanging around it. DOW futures are currently down 150 points, but we could soon leave the 200 MA behind with continued risk-off sentiment from equity funds and institutions alike.
AUD/JPY
AJ is SIGNIFICANTLY tied to stock market activity. Please note this for future reference. Especially seen recently ( in a risk off environment), the correlations are almost perfect. Keep in mind, if you're looking to trade AJ, you should be watching the US, Asian, and European/U.K. equity markets. We won't be interested in entering this pair until the 200MA of the S&P 500 (SPX) has broken the 200 MA.
DAX (DEU30)
Breaking the December TL, the question is now, where next? After a 200 point move in 10 mins. this week, I will be watching this closely. This is a great break/gap, however I don't see the gap being filled as being likely. Downside target is 11844.
UK100 Index (UKX)
Showing the same correlation to U.S. equities, the DAX, and other capital markets, 7170 is a level being tested, which if broken, could mean some serious trades are in play for the GBP pairs. (We'll get to that when it happens this week, possibly today). The 200 MA is being tested, and we could see outflows from the Pound, which would cause even further weakness. (BREXIT = risk-off)
WTI/OIL
Oil has come unraveled in the last few sessions, which I've been watching all week and we got one of the best entries yesterday. Once 60 was broken on Thursday of last week (-6%), this is moving in-line with risk, and it's all tied together.
Downside target is posted in the channel.
Brent (BCOUSD)
No Updates from yesterday's FA update.Downside target is mid 60s after a break of 67.13
Gold (XAUUSD)
Intriguingly in a very bad way. It doesn't know what to do. It's like it's confused between dollar risk, safe haven risk; it continues to seem to hold onto the august trend-line (daily, ascending), regardless of the break. However, it wasn't convincing enough. I don't know what to do with gold for trading it, so that being said; I'll be staying away from giving any entries or targets. The way indices are moving, oil, there's some big markers to watch with the 200-MAs as stated above, before we can get a bigger looking picture.
Silver
Silver is different. I am bearish on silver. It has a clean daily descending trend-line which has been tested over a dozen times.
Downside target fro silver is 14. If stocks are getting beat up, gold will have more upside potential; however silver is different in that it is not looked at by the markets "go to" precious metal in a risk-off scenario. Based on the way it's been trading, looking to any slight rally towards the TL, you could consider shorting for one of the easiest downside constitution trades I've seen in a while for metals. ONLY SELL at highs, never buy silver until 14.
Copper (XCUUSD)
Trading in a range, to me, it's another situation similar to the one above, where selling the rallys and not longing will be the only trade I am interested in. Downside target for copper is 2.62.
Aussie Index (AUXAUD)
Looking at the Aussie index, is a little more interesting to me because it's been so strong compared to other capital markets. It's been one that if we get a risk on situation, the AUXAUD will bounce. (Correlations are significant). Because of its relative strength, keep in mind it's over extended. I don't trade this pair, but if you can, we're coming back into a support price of 6380. If the TSE and SPX move sideways or downside price action, the Aussie index could propell to new highs.
AUstralia 200 a Short SignalThe price broke down key level 6199 and D1 close under it.
On the chart we see that the price bounced many times from that level and made a fake broke. It is powerful signal that big players are interested in that level.
I look for a short near: 6189.9
S/L: 6218.5
T/P: 6044.7
C.C.L. — Candle created level
C.A.P. — Candle Approved level
F.B. — Fake broke
P. - potential profit in 5 times bigger
P.S. Push like and subscribe if you want to get more my free signals and market overview.
S&P 200 bigger picture: Up to 6800 before going down to 4500ASX 200 started a new five Elliott wave structure after the completion of correction in Februrary 2009. It has since completed four waves on a monthly scale and is now running upwards in its fifth wave which is likely to terminate around 6800 and go down to around 4500.
Why do I think so?
If we zoom in in the period from February 2016 when the fifth wave started, you would see that ASX 200 has already completed four waves on this weekly timescale (green waves) and is now completing the fifth wave which started in February 2018. Also see a chart copied below.
If we further zoom in the period since February 2018 by going to the daily scale (see below - pink waves), you would notice that ASX 200 has completed two waves and is now running in the third wave. The five waves on the daily scale are likely to be completed by 6800.
Further, 6800 is the top of the bullish channel started in 2008. Also, it is the value of the previous top before the financial crisis which is expected to offer significant resistance.
What would be the correction target?
If the correction is 61.8% then it could take ASX 200 down to 4500, but of course, it also depends on the level from which ASX 200 starts correction. If the correction is up to 78.6%, then ASX 200 will drop to 4000.
When is the correction likely to start and end?
It is difficult to say but I expect the correction to start in Nov-Dec 2018 and to complete by Jan-Feb 2020.
Is there light at the end of the tunnel?
Yes, this entire wave started in 2009 and completing in Feb 2020 would just be the first cyclic wave. After its completion, ASX 200 is expected to start the third bullish cyclic wave which could run for many years and could take ASX 200 up to around 10,000.
Weekly chart
Daily chart
Note: It is not a financial advice. Please trade at your own risk.
