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What The Charts Say Will Happens Next As "Equities And Yields Approach Critical Targets"

Tyler Durden's picture




 

With fundamentals officially dead and buried in a centrally-planned world, the only remaining clue we have to "predict" what the algos will decide to do the next microsecond, are charts, because if discounting is dead the only thing that matters is what has already happened.

So, with "both equities and U.S. yields approaching critical targets" according to Goldman, here is what the firm's technical analyst Sheba Jafari thinks happens next.

Both equities and U.S. yields are approaching critical targets. The S&P is nearing a 1.618 extension off the August low at 2,121. The Nasdaq Composite is near an ABC from August at 5,156. U.S. 10-year yields are ticking above an ABC target from October at 2.206%. U.S. 2-year yields have broken above their 0.7314-0.7609% range highs and are now approaching the September spike at 0.8148%.

S&P Index Daily – The index is getting closer to an important target at ~2,120.84. This is a 1.618 extension taken from the August low. It’s also right underneath the highs from April through July which ranged between 2,126-2,135. If this is truly a bullish sequence – the 3rd wave of an impulsive rally that started in August – this could be an ideal place to start a corrective 4th wave. Fourth waves tend to retrace between 23.6% and 38.2% of the length of wave 3 which in this case comes in at ~2,059 and ~2,023. Anything below 2,023-2,020 would however warn that this is in fact a very large corrective cycle; wave 4 should not retrace further than the top of wave 1 which in this case comes in at 2,020

 

S&P Index Intraday – The rally since Sep. 29th has been undeniably impulsive. There is however a potential wedge which has developed on the intraday charts. Wedges are pretty reliable reversal/exhaustion patterns. Would therefore view any break below the bottom of the pattern (the uptrend from Sep. 29th) at 2,097 as a signal that momentum is stalling (start of a retracement).

 

S&P Weekly – What happens next? The chart below is an interpretation of the long-term wave count. In summary, the decline from May is the 4th wave in a 5-wave sequence that started in Jul. ’10. It’s also within a larger degree wave III in a V wave sequence that started at the Mar. ’09 low. The question to ask now is whether wave 4 has really finished (whether wave 5 began at the August low)? If wave 5 really did begin at the August low, the minimum target for this next leg higher is all the way up at ~2,226. Confidence in this scenario would increase significantly past 2,121-2,135. The only small problem with this theory is that wave 4 (from May to August ’15) seems a little too quick/sharp; 4th waves tend to be more complex. Failure to break 2,121-2,135 (and a subsequent decline below 2,023-2,020) increase the chances of a much more protracted corrective cycle which would likely be flat/sideways (1,867-2,035) for a few more months. The end game (a 5th wave rally) should however remain the same.

 

Nasdaq Composite Daily – The index is testing an ABC target off the August 24th low at 5,156. It will be interesting to watch this level as a signal. A break higher than 5,156 would confirm the impulsive nature of the rally and add some confidence to any break higher in the S&P (through 2,121-2,135). Failure to break 5,156 might warn of a broader corrective sequence. The main pivot to the downside is 5,000-4,920. This relatively wide “zone” includes the Oct. 22nd gap, the 200-dma and the previous interim high from Sep. 17th.

 

U.S. 10-year yields Daily – Currently ticking through an ABC target from the Oct. 2nd low at 2.2057%. This is the first time in a while that the market has shown signs of an impulsive rise developing. It should increase the chances of continuing towards a 1.618 extension from October at 2.35%. The next level to watch is the Sep. 16th high at 2.30%. Would view a retracement back below 2.21% as a significant failure.  

 

U.S. 2-year yields Daily – Currently through the big 0.7314-0.7609% pivot area which held a number of highs from Dec. ’14 to Sep. ’15. Because the market failed to hold a break above this level back in September, it would really need confirmation through the Sep. 16th high (0.8148%) to be considered a clear breakout. Any retracement back below 0.7314-0.7609% warns of a potential reversal.

 

EURUSD Daily – The market is currently through 1.0871; an ABC target taken from the August high. As discussed at length in recent updates, a break below this level increases the likelihood that the decline is actually impulsive (a 3rd of 5-waves rather than an ABC). Wave 3 would target somewhere near ~1.0485 (a 1.618 extension from the Aug. 24th high). The next level to focus on stands down at 1.0819-1.0808; the previous lows from July and May. There really is very little immediate support below this pivot until 1.05/1.04. It’s important that EURUSD does not retrace back above 1.0871 going into the rest of the week.

 

DXY Daily – Currently above 97.74-97.81; the trend across the highs since March and an ABC target off the August low. This has a very similar setup to EURUSD except that it looks slightly more like a triangle correction. Either way, the break above 97.74-97.81 helps to confirm the move in EURUSD. The next level higher is 98.15-98.33 (series of peaks from July/August). If this is truly wave 3 of a 5-wave rally, it should have potential to eventually reach 100.27 (a 1.618 extension off the August low). Failure to hold above 97.74-97.81 would be disappointing.   

 

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Wed, 11/04/2015 - 14:40 | 6749512 Hitlery_4_Dictator
Hitlery_4_Dictator's picture

New highs coming

Wed, 11/04/2015 - 18:07 | 6750524 Mentaliusanything
Mentaliusanything's picture

I prefer using Tea leaves read on the left ass of a virgin. 

Wed, 11/04/2015 - 14:42 | 6749517 HopefulCynical
HopefulCynical's picture

Lines and squiggles; squiggles and lines.

The market will do whatever the banksters want it to do, which I believe will be to suck everyone in one last good time before going Full Hindenberg.

Wed, 11/04/2015 - 14:54 | 6749564 LawsofPhysics
LawsofPhysics's picture

Yes, exactly what my father said in 1971, then again in 1987, then again in 2001, then again in 2008...

what the fuck ever...

 

Wed, 11/04/2015 - 15:03 | 6749607 HopefulCynical
HopefulCynical's picture

LoP, in previous years the banksters didn't have the level of control over the markets that they do today. Everything the markets have done since '08 has been 100% due to bankster bullshit. As the article said at the beginning, fundamentals are dead. All we have left is bankster manipulation. And the best way to screw the most people is to rocket this bitch to the moon one last time, and then pull the rug out.

If it collapses now, they mainly screw themselves. If they blast it off one last time, they get to suck a lot of $$$ in from the sidelines, to which they can sell and go short.

Wed, 11/04/2015 - 15:09 | 6749638 LawsofPhysics
LawsofPhysics's picture

"in previous years the banksters didn't have the level of control"  --  BULLSHIT.

Read up on your pre-depression and world war history.

Wed, 11/04/2015 - 15:29 | 6749748 Fahque Imuhnutjahb
Fahque Imuhnutjahb's picture

 

 

The fictionalization of the economy, and the TBTF banks' share of the economy is the greatest in US history.

Major shifts have been made to socialize losses, and to put the TBTF banks' claims on deposits ahead of

the depositors.  https://youtu.be/MN4drI2CLEQ?t=28m16s   When you get a chance, watch this whole thing.

It'll make you want to go buy lots of rope.  Be sure you've had your blood pressure meds.

Wed, 11/04/2015 - 14:57 | 6749577 RadioFlyer
RadioFlyer's picture

It will make the Hindenberg look like a summer picnic fire with roasty marshmallows for everyone.

Wed, 11/04/2015 - 15:04 | 6749614 HopefulCynical
HopefulCynical's picture

True dat.

Wed, 11/04/2015 - 14:42 | 6749518 knukles
knukles's picture

What?

Wed, 11/04/2015 - 14:43 | 6749522 yrad
yrad's picture

Chart porn makes me horny.

Wed, 11/04/2015 - 14:44 | 6749527 Johnny Horscaulk
Johnny Horscaulk's picture

huh?

Wed, 11/04/2015 - 16:19 | 6749965 T-NUTZ
T-NUTZ's picture

Your phone's ringing, Dude.

Wed, 11/04/2015 - 14:51 | 6749554 assistedliving
assistedliving's picture

whats w/ all these waves man?

Why didn't the surfer ride the glassy waves? Because he heard they were breaking!

Let me have this wave, would you? My girlfriend is watching from the beach.

and last...

Give a man a surfboard, and you've distracted him for a day. Teach a man to surf, and you can't get him to work.

Wed, 11/04/2015 - 14:53 | 6749555 taopraxis
taopraxis's picture

Gold is down nearly every day on higher rates and stocks are up nearly every day on lower rates. Gold looks to be headed lower, I suspect. I've got about 60% of my paper gold position and will be slowly accumulating. My physical gold position has not changed in the past couple of years and I have no plans to change it.

 

Wed, 11/04/2015 - 14:54 | 6749562 El Hosel
El Hosel's picture

Elliott is always right because you can always go in after the fact and change the count to make it so..... Which is nice.

Wed, 11/04/2015 - 15:10 | 6749649 Tim Knight from...
Tim Knight from Slope of Hope's picture

You have just summarized the entire business plan of Elliott Wave International.

Wed, 11/04/2015 - 20:05 | 6751237 El Hosel
El Hosel's picture

Hello Tim,

 Where is the Cherry that goes on top of this steaming pile of "Market" anyway..... For Fuks Sake this shit is getting Soooooo Old.

  Like 9 years old......  https://www.youtube.com/watch?v=Pa1pIO4_lUY

  Call me six pack.

Wed, 11/04/2015 - 15:10 | 6749650 Tim Knight from...
Tim Knight from Slope of Hope's picture

You have just summarized the entire business plan of Elliott Wave International.

Wed, 11/04/2015 - 15:08 | 6749635 doggis
doggis's picture

on your WEEKLY chart of the spx - your roman numeral II is outrageous. 2nd waves usually retrace between 61.8% and 72.6% of wave I. your roman numeral II retraces barely 23.6%. Wave B's on the other hand DO have mild retraces......... how do you defend your long term count? and why should we think your long term count is remotely accurate?

 

so in short - WTF!!!!!!!!!

Wed, 11/04/2015 - 15:30 | 6749758 franzpick
franzpick's picture

Here's silver on the lows getting ready to try the new 14 handle on for size tomorrow. The weekly view says $14 will never hold and we could be talking $13 soon, and then the monthly even points to $12-11-10 during the ongoing worldwide export-commodity-bond-EM/equity/currency collapse. My screens still say stacking cash buys more PM phyzz lower later:

http://www.investing.com/commodities/silver-advanced-chart

Wed, 11/04/2015 - 21:21 | 6751573 hyperbole2000
hyperbole2000's picture

I trend EW on the DJI daily close: Call me a purist. The DJI has similar EW structure to the SPX; however, I would tag the inflection points as follows:

The SPX wave  1, 2, and 3 are similar to the DJI wave 1, 2, and 3.

The SPX wave 4  is a DJI 3 wave A of wave 4

The SPX wave 5 is a DJI 3 wave B of wave 4

The SPX A of wave 2  is a DJI 5 wave 1 of a 5 wave C of wave 4

This requires wave 4 and 5 of wave C of 4 to pivot in a very narrow range to complete a 3-3-5 flat.

From a non-EW perspective this is a very low probability outcome.  If it occurs I will be all in shorting the shit of pre-selected targets.

 

Several of these narrow pivot opportunities have evaporated in the past from BS fed fiat dumping on the market.

One day the Fed will run out of gunpowder and I will celebrate by buying a Juke-R.

http://www.nydailynews.com/autos/latest-reviews/nissan-creates-son-godzi...

 

Wed, 11/04/2015 - 21:45 | 6751725 illyia
illyia's picture

CHARTS!!!!

:o)

Thu, 11/05/2015 - 01:55 | 6752525 Keyser Sose
Keyser Sose's picture

"Charts are marvelous tools for predicting the past."   -- Eliot Janeway

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