The Day Ahead: AM Edition 2025-05-07
FOMC day
Bonds
Nice response to 114^00 in bonds on Tuesday. Is that the end of ‘(C) of [II]?’ Maybe. You can make a case that there needs to be one more down move, but I would be careful with that. If ZB can get over 115^09, I think it best to assume that wave [III] up is underway.
Crude Oil
Crude has had a decent bounce for the last couple of days but could use a minor consolidation before moving up in the last leg of (B).
Dollar Index
I have little to add to what I said yesterday about DX. Wave iv may have terminated a little short of what is typical or still stuck in a more complex iv. For now, I’m assuming bears try to force DX lower as that would relieve the overbought condition on the RSI.
Euro
And same in the Euro as DX but the inverse. I suppose the minimum requirements for a wave iv have been met but admit my confidence in that is not that high. For now, I am allowing for a push higher though needs over 1.1395 to get started and need not make a new swing high if wave iv becomes more complex.
Gold
I’m assuming gold travels sideways in a fourth wave and thus am skeptical of pushing to a new high right away. While under 3427.80, I have a minor bias to lower so as to waste time in the range. Short-term bears need support at 3382.40 to fail.
S&P 500 Futures
I have to give bears credit in that they have been selling attempts to fill the overhead gaps but at the same time I can’t say we have a confirmed reversal. I’m sympathetic to bears in that I think the major goal of the wave ‘a’ has been met, to drive up to near the top of the April 2nd candle. If bears are to keep up the pressure, they need to drop under 5637.50 next with the goal on the day to drop to a new swing low after the FOMC, maybe around 5568.00. Bulls hope for one more thrust toward that zone from April 2nd highlighted on the daily chart.
