Reviewing index charts and finding somewhat differing wave structure for each of the indexes as E-wave progression is not in-synch. The dow and spx appear to have started their wave v-3 descents. Due to the short wave-iii in the spx there is a wave 4/1 overlap in the spx which needs to be addressed(minimal overlap, if any, in the dow). NDX appears to have topped at in wave i-4 (right at bottom of what would be wave i-1), which if correct - implies that the NAS moves down next week. Coming week features May option expiry where we are already below MAX pain levels. Next fibo turn date is not until the last week of May which I believe is consistent with the timing Mr. Cash is looking at for the next nested Hurst cycle low. McHugh notes the wave 4/1 overlap I have pointed out above >which is not permitted under Elliot wave rules< and sees a whole series of waves now unraveling to the downside with us currently in a wave i-3 of a SIGNIFICANTLY more complex bearish pattern. One problem here is the size of the pattern (can not even predict downside targets at this time; another is that we only have slightly more than two weeks (one of which - the coming week- seeing option expiry) for this to play out and into the next fibo turn date - . How to put all of this together is not exactly clear -but here is my $0.02:
1) McHugh, I should note , has been dead on target since the rise into the March peak. This current wave sequence has played out faster than he originally marked out. If correct, then expect that option expiration week will not matter as we have wave three's in play. We could decline to the ~9000 area by the fibo date (my interpretation - as this coming fibo date is supposedly one of significance). We should rebound strongly from here which as we would have completed a large order
wave-1 with a strong wave-2 to follow. The use and consideration of larger order waves as in play here eliminates the problem of the wave 4/1 violation in the spx. MACD and Stochastics (as well as Hurst) not supportive of this type of decline right now.
I presented the above as I have it mind but it is not necessarily my favored path. Despite the noted wave 4/1 overlap, I also perceive market intervention at critical price points. From an e-wave standpoint they should not matter (and ultimately won't). My stochastic chart (previously posted) remains on a 'sell' and still points down. Fridays drop shows how fragile the markets are right now. There appears to be some bond money filtering in and looking for a place to hide and which gave some early support. I also noted that the bounce target late Friday at dow 10075 was a virtually exact 'zigzag' target at which to trigger a rally and thus prevent a sub 10,000 dow close prior to this weekend. I am therefore also considering:
2) A fast downmove starting the week to ~9900 and then a 'supported' rebound into option expirations. Double bottom or slightly lower into the fibo period. In my referenced stochastic chart, the divergent MACD on the last peak would be supportive of this potential outcome. Wave i-5 would also be relatively short, which is expected in the current sequence (the wave 4/1 violation, however, is an unresolved flaw (albeit in one index) which I have to keep in mind).
3) Markets continue up Monday morning to a fibo retracement (from 10,300 area) prior to #2 above
4) The market from the Monday open tries to move sideways to up right into option expiration. I originally thought limited intraday volatility would also accompany this - but now, not sure. Not my favored outcome and not supported by my indicators. Supported by observation of market movement (intervention), option expiry with max pain above us, and bond money movement.
>On Friday, I found myself stuck in major traffic as I listened to the market falling to -100 on radio reports. I had expected to be able to be trading by 3PM, to close out my week's positions. Arrived home at 4:03PM - by then the market had moved to -40. My es/ym futures had been closed by their trailing stops(kept them closed due to late Fri rebound) and was able to sell my djx may puts at the asked price (but less than they'd have been at 3PM, however!!)(in the black - so no overall complaints).
Still holding June spx 1100 puts/djx 100 and 99 puts/q's 34.0 puts.
Action early in the coming week should be telling. I kept my es and ym futures closed due to my indecision about how we start the week (as is apparent in my path options noted above). I also had no desire to hold May options into this final week (risky enough to hold them as long as I did). E-waves and my stochastics still say downside remains ahead, therefore held the June options. If we slice right through dow 10,000 without any support shown for option expiry then we could be in for a very nasty decline right through to the end of the month. Time to start looking at some calls to buy at the end of the month for the expected rebound.
Gold remains on a sell signal - but a bounce should be seen soon. Miners still appear in need of some shock therapy.
Regards,
Gary
AI
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