CNBC PowerLunch Europe
LET'S LOOK AT THE S&P 500 DAILY CHART
In May there was a false break top that I had forecast would complete an intermediate counter trend rally in a bear campaign. I also said if the trend were down, as I had forecast, the index would not rally past 4 days until a low was in place. You can see the rallies have been 3 days. I have been able to forecast this because this is the way markets trend. Most people now days are more interested in some complicated method of calculating a moving average than they are understanding trends and understanding trends is the "Name of this Game." When indexes are in strong trends they only rally 1 to 4 days against that trend it's that simple. I said the index would test the January/March lows. By test I mean stop marginally above or marginally below that level. The rally from that test will be 7 to 11 trading days and then run down and test the lows again. If that support holds then the index will go into a two month choppy sideways move. If it starts to trend below that support then 1180 could be the next downside objective. I am assuming the end to this current move down for the forecasted 11 day rally will be around July 3rd.
The price level for this next low is difficult I would expect the trendline drawn from lows to lows to be broken and create a capitulation low or spike low but nothing as large as the January spike. But that is not a requirement for the low. Price could be as high as 1296 (1276 is interesting) or as low as 1234. If yesterday was a low it would be bearish and the rally would only be 7 trading days and make a strong run down when completed to marginally break the March low. Looks like Midcap and small cap just rotated into highs.
LET'S TAKE A LOOK AT THE DAX INDEX
Last time we looked at the DAX was 14th May and I explained in detail how the high could come in the next few days but to be careful because it could also exhaust up to as high as 7500. It only went to 7340 with a marginal break above the "OBVIOUS" resistance as I had explained on the 14th of May. Back as early as April 25th I indicated the March low would need to be broken to set up a low. The downtrend was just too strong to believe in a low that didn't come from breaking a low. I don't see any reason to change that forecast. There is a 5 wave structure down and that could indicate a complete movement down but just as with the S&P 500 I would be very leery of a low from this price level and the best might be a 7 to 11 day rally and fail. Then break the March low for a low.
A review of other forecasts: Crude could still spike up into the 30th of June for an important high but when a market is in a tight sideways pattern the third day off a low is always important since that is the normal counter trend time period. This has been such a tight, small range while in this sideways pattern a spike up would not be unusual.
The US Dollar Index was discussed on the 11th and I indicated it would not get past 13th or 16th (Friday/Monday) at the price of 74 and it hasn't. But it also hasn't been able to get any legs to the downside. The next two days that could start a move or trend are this Thursday or the 3rd of July.
If you would like to understand trends the E-BOOK offered on this site is a very good start. This is proprietary analysis and would only be found on this website.