S&P Floating Annoyingly Higher; AUD/JPY Short Still in Place

S&P 500 Cash Index




The S&P failed to drop to a new low as I would have liked to see in order to create a small 5 wave drop. Instead the market treaded sideways and appears to have made a triangle. Triangles can only occur in B, X and 4th waves. Looking at the above chart, a 4th wave is the obvious choice. It also sets up well with tomorrow's jobs number because it suggests a sharp rally to a new high which will be immediately reversed. So tomorrow's jobs number can easily bring that type of volatility. So I hold the short term bearish view but am prepared for a sharp thrust upward from the triangle before topping and reversing. If my count is correct, it means the S&P will decline most likely to at least the prior 4th wave area of 1086 before even thinking about bottoming.

If the S&P cash index makes a strong push higher on high volume and strong internals, and momentum on the intraday charts turns up and it appears clear it will close well above 1125, I will close all my short term short positions.


AUD/JPY

1hr



My short at 80.22 on this pair was doing nicely last night as it fell to 79.17, but then New York jumped in and skyrocketed this thing higher to where it sits today which is pretty much right around my entry level. For the very short term, this drop and reversal is concerning for the bearish case because the drop looks like a 3 wave affair, and the ensuing rally is a much stronger impulsive looking rally. This makes me think that last night's drop might be a wave B, and the current rally is part of a C wave that will bust out to a new high above 80.90. This is also supported by the fact that it tends to track closely to the S&P, which I also am projecting to get a pop into tomorrow's session. So my stop at 80.90 is quite vulnerable from here. But a break of 80.90 is not certain and considering where the pair is trading now, and that only half my position will stop at 80.90, I'm holding short at this time.


4hr




Looking at the 4hr chart builds the picture of why I like this short trade on the AUD/JPY so much, and why I'll remain steadfastly bearish on it as long as it stays below 82.90. We have two clear 5 wave drops, the first one resulting in a correction that stopped near the 61% fibonacci level and then reversing in another 5 wave decline. The larger trend is clearly down so I want to remain short as long as the pair keeps trading underneath the most recent 5 wave decline.

My stops remain the same: half position stop out at 80.90 and the other half at 82.90


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.