Market Report: US Stock Markets Still Setting Up
We went into this week looking for a short term top for wave [iii], the late day spike on New Year's eve appeared to give us the small spike from a small triangle, so it set up for a reversal this past week for wave [iv]. My preferred idea is that this is still in wave [iv] and a new high is still to come, although there is an alternative count that suggests the peak is in place for wave [v] of 5, however I would need to see a strong decline under 16200 to suggest a reversal.
So going into next week I am still looking a bit lower for wave [iv], where we will look to get long for a move higher once the market meets our targets.
We are still targeting the 16300 area for wave [iv], so a bit a more downside is ideally seen early next week, then setup for a move higher for wave [v]. Although I am still looking for a major peak, I would prefer to see a minor new all time high first before setting up for a large decline.
I am still working 2 ideas from the March 2009 lows, both ideas suggest a short term top should be close and set up for a large move lower towards to at least 14000-14200. The bullish idea shown in blue suggests a pullback for a large 4th wave, the bearish idea suggests the move from the March 2009 lows is coming to an end, although at wavepatterntraders we focus on actually trading to make $$$ not hero calls, whilst I am a fan of having some long term plans, the real trading is still done on 60 and 240 min charts.
In my last article I wrote about the potential for the JPY carry trade to unwind. The past week we saw some weak price action on the JPY pairs, if a peak is in place on Japanese stocks and the JPY pairs then I suspect that is going weigh heavily on US stocks. So it's important to watch the Japanese markets over the coming days & weeks.
This past week we finally saw some decent moves in the markets, if our ideas work out the way we want things are just getting started and a significant move lower is expected.
The moves we saw on US markets, EURJPY, GBPJPY and USDJPY are nothing compared to what I am expecting over the next few months, I am looking for some huge moves in the markets, exactly the conditions traders need to make $$.
Until next time,
Have a profitable week ahead.