The S&P this morning is pointing to a down open, but that’s actually a good sign. The stock market can be a dangerous place for beginners, but if you know what you’re doing it offers opportunities that just aren’t possible anywhere else. And of course there are other things as well like Forex trading (Foreign Exchange, AKA Foreign Currency), futures trading, and cryptocurrency trading – one of my personal favorites. Whatever you choose to trade, please make sure you start trading on a simulator first (AKA Paper Trading) and especially if you are a beginner, keep your trade sizes small so you don’t risk blowing up your account.
Currently the S&P looks like it’s working on a continuation of the recent break of the all-time highs, but nothing is ever 100% certain until after the fact. There are at least two possible scenarios playing out here. If the S&P makes another higher low (higher than 2914.50) and then makes a higher high (higher than 3006) then we have a confirmed continuation of the uptrend. However there is also a Bearish case to be made, and that is if the S&P makes a lower high, and then breaks the previous higher low.
Either scenario could play out, but looking at the smaller timeframe, to me at this moment it looks more likely that we are continuing to the upside. Everything is fully in the Bullish camp right now – higher highs and higher lows, Oscillator and MACD above their zero lines, price above the major moving averages, and the shorter term moving average above the longer term. There are no signs at all of a divergence on the daily oscillator either, nor has price even come close to violating the daily uptrend line. So for now the only direction worth trading is with the trend – to the upside.
That’s not to say this market will go straight up. Nothing ever does. All markets move in patterns of highs and lows, and it’s recognizing those patterns that is the first pillar of how we trade. On top of that our Elliott Wave Theory counts strongly suggest a bullish continuation as well and if we get that, we could be looking at a run to upwards of 3300 or beyond. Certainly though if we get to the 3300 neighborhood, I’ll want to be protecting profits.
In other markets, for those who like crude oil trading, CL looks to be staging a comeback and is now making higher highs and higher lows. We appear to have finished with a 60minute wave 3 and are pulling back for a wave 4. If this wave 4 is done, then from here we should break the high of 60.28, but the Bearish scenario is that we have only completed the first 2 of the 3 waves in this correction, and wave C down is still to come which could bring us closer to the golden ratio retracement of around 55. If we take out the low of 56.04 then we can expect a bit more downside to come, before heading upwards again to finish wave 5.
Now for a gold market analysis. My eyes suggest that gold has just completed a wave 3 to the upside, and is either in a wave 4 correction, or has just finished one. We can’t be 100% certain yet, but looking at the smaller timeframes it does appear to be in the beginnings of a wave 3 up on the 60 minute. As long as we hold above roughly 1385 and establish a higher high, then I would say that confirms the wave 3 up. So that would mean we are in a daily wave 5, and our initial target should be no higher than about 1443. Could gold head higher? Absolutely. But near the 1443 level you’ll want to begin protecting profits.
Now for those of you with a natural gas trading strategy, NG looks to be heading higher after finally bottoming on June 20. NG has broken the previous lower high, and established a higher low, so it appears the trend has changed. My Elliott Wave counts suggest we may be in a wave 3 up and if that is correct, we should soon take out today’s high and hold above the 50 Simple Moving Average. My expectation however is that price will remain near this level long enough to allow the daily 13 Exponential Moving Average to catch up to the 50 SMA a bit, and when the 13 finally crosses above the 50, we will have confirmation. On the other hand if we take out the low of 2.217, then there may be further downside after all.
And lastly, for all my Bitcoin traders out there (or those just curious about Bitcoin trading). Bitcoin and cryptocurrency in general has of course been on a historic bull run recently, but as mentioned previously markets never go in a straight line. I believe we have just completed a daily wave 3 up and have now completed the wave 4 correction, and are preparing for a final push higher for wave 5. Grab what you can for now while it lasts, then wait for the big Elliott Wave full-cycle correction to get long and attack those all-time highs!