Temporary Debt Ceiling RetracementLooks like Minor wave 3 ended a tad shy of 4136 and a few days late, but still on track overall. Minor wave 4 should only last 2-3 days with the bottom likely occurring by Thursday at the latest. It is possible Minute wave A inside of Minor wave 4 was completed today. Models are pointing to the bottom around 4176 based on historical Minor wave data. Minute wave C could end with a 138.2% retracement of Minute wave A which would place the bottom around 4177.
Once Minor wave 4 is finished, Minor wave 5 should complete Intermediate wave 3 up with a larger top at one of the highest prices experienced in over 12 months. Based on all of the Intermediate wave 3 interior waves, Intermediate wave 3 will likely come up short from initial forecasts above 4300. The top will likely occur sometime next week around 4268. I will likely look into Intermediate wave 4’s bottom around the middle of next week.
This drop for Minor wave 4 will likely continue until the House and/or Senate votes on the debt ceiling bill. Everything should see a nice jump when the bill is passed, however, something else is lurking around the corner with Intermediate wave 4 down. CPI is June 13, PPI is June 14 along with the next Fed rate decision in the afternoon. Looks like market could drop into the Fed meeting but begin Intermediate wave 5 upward after the meeting. With the debt ceiling likely out of the way by mid-June and Fed news possibly positive, the cause of the major market top near the end of June beginning of July could be earnings related or geopolitical. China action against Taiwan is still my leading catalyst especially after the GPU chip boom. This could turn into a major bust quickly if China takes Taiwan in a short or prolonged conflict. Too much of the world operates on chips moving through Taiwan.
