I guessed right yesterday that the 5 day cycle down phase would go sideways. Now we await its conclusion and the next pop in this rally. It might come today. It might come tomorrow. It looks good for at least 3965. But there’s a massive wall of supply above that from 3965 to 3995 on the ES, S&P 24 hour fuguetures.
Of course, the best case from a bear perspective would be a double top here and a rollover. There’s a big Treasury coupon settlement on Thursday that will suck cash out of the market system, so I wouldn’t rule it out. Even if a minor breakout happens today, that wall of supply, and the Treasury settlement should lead to a downdraft at the end of the week.
Bond traders are already getting a whiff of what’s to come. Look at how that uptrend channel held on the 10 year yield. It’s going much higher from here.
Nothing new to report on the crapto front. BTC is just hanging out in consolidation waiting for the next leg down. Massive resistance in the 21-22k range is keeping it from rallying. The consolidation is likely to continue for days or weeks, but ultimately BTC should head for its 1 year cycle projection of 9-12K and its long term measured move target of 5000 below zero.
On the currency front, the EUR/USD has an inflection point at 1.06. The cycle oscillator setup is bullish for the euro. But it will only be so if ECB policy gets tighter, more in line with the Fed’s extreme tightness. As long as the imbalance between tighter Fed policy and less tight ECB policy continues, I don’t expect euro rallies to amount to much.
Gold is just a bore. But if it holds above 1790 for a couple more weeks it could go from bore to buy.
I’ll have more on that tomorrow.
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To better understand the big picture right now so that you can take the correct action when the time is right, check out the following:
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