The Day Ahead: PM Edition 2024-08-05
S&P 500 bounces out of the hole
Bonds
ZB managed modestly higher on Monday to push for an extended wave [III] target before slipping back in the expected wave [IV]. Initial support at 124^20 with next at 123^17.
Crude Oil
Crude pushed lower initially but bounced back hard from the 71.65 target. I am penciling this in as a wave ‘i’ low and now in the early stages of a wave ‘ii’ bounce. Initial resistance for the first leg of the bounce is at 74.65 followed by 76.10.
Dollar Index
Promising low against the 102.19 support zone in DX today. First confirmation of a reversal up is recovery of 103.19.
Euro
I’m penciling this pop up in Euro as a possible wave (II) high. Yes, the wave count from June 26th is not the most elegant but can work. Will see if Euro follows the intraday cycle down into Wednesday ideally under 1.0911.
Gold
Gold is attempting to form a five wave move down from the lower high in a low degree third wave. Ideally GC pushes down away from the daily and 240-minute 20 period EMAs to around 2362.60 or 2349.90.
S&P 500 Futures
Well, it was an interesting day on Monday as Japan was melting down in the morning which caused a gap down from the Friday close. However, bears were thwarted as an intraday target at 5146.25 held after a brief poke past. What is happening? Well I’m still not certain but I’m giving bears the benefit of the doubt now to form a five wave impulse down from the high. Here is what that looks like on the daily chart.
Can bulls pull a rabbit out of the hat and get a new high out of the S&P 500? Maybe if they can hold above the April low and push up over 5300 with some force. The form would be an expanding ending diagonal. Not my favorite but given the odds of rate cuts are going up, this might be a ‘buy the rumor, sell the news’ type of setup. For this to work, bulls need to not waste time and get to work right away.
As I said earlier, I’m giving bears a chance to see if they can form a [IV] and [V] for the first impulse down over the next several days. For this scenario to play out, bears need to form a consolidation that ideally remains under 5300 but no higher than 5414.75 and a new low that preferably takes out the low from April. The danger for bears is that if S&P 500 futures begin to trade over 5300, covering may come in with enough force to ruin the impulse down and give bulls their chance for one last high. Remember, even if bears do push the market down from 5300, it may not result in a new low immediately as fourth waves are typically complicated.
