S&P500: The daily chart for the Standard & Poor's index shows that the US stock market is once again pushing up against its Andrews Median Line Pitchfork resistance. However, this time, the wave count is clear as a text book on the 240 minute LINE chart. According to that, we have a wave (3) top forming. From around here we will have a small correction, and potentially one last rally (but not necessarily) , then it may have formed at least an intermediate top and perhaps the major top. Also, the market is tagging the 2.618 extension price target (see charts below).
ACTION: Look for topping action over the next few sessions, with the possibility of one more high. Either way, begin preparing for short trades on overbought intra-day rallies, once the 60 and/or 240 minute trends are sloping lower (should that occur). We should see a price reversal to lower within the next 7 trading days based on the current wave pattern, but possibly from around these prices in late Asian and early European trading.
Option traders should consider lightly buying VIX calls or a VIX bull call spread out 90-120 days, within the next few session before volatility picks up. Do not go overboard with this idea, until we confirm a major trend change, which could possibly play out until the August to October season high time-frame, but that appears less likely thus far. If playing it safe is most important to you, you should wait for the initial 5-10% sell-off then sell short (or buy puts) on the first reaction rally, should this scenario unfold.
March 9th is the anniversary date of the March 2009 low. The 2000 high was in March. and the 2003 secondary low was in March, so March is often a high or low point, making it a potential reversal month. See daily and 240 minute charts below.
NOTE 1: What makes this more compelling is that the multi-cycle summation chart (private) shows March 2013 as the likely cycle high for the next 3 years until a 2016 low, should the cycles remain intact. Again, these are very long-term cycles, so we must use confirming indicators.
NOTE 2: If 1556.80 is exceeded on the S&P, then a wave extension is likely unfolding and that would likely negate a potential top for the time being. The DX US Dollar index also appears to be at or near a 5th wave top for this leg up.
ACTION: Begin preparing for short trades on overbought intra-day rallies, once the 60 and/or 240 minute trends are sloping lower (should that occur) and especially if the 4 day high is not exceeded within two sessions. See daily and 240 minute charts below.
EURUSD: The Euro has reversed the YELLOW and CYAN trend indicators to long on the 240 minute time-frame.
ACTION: Begin preparing for LONG trades on oversold, intra-day pullbacks, especially the next 60-130 point pullback – and make sure that the 60 and/or 240 minute trends are sloping up (should that occur). See 240 minute chart with analysis for the Euro-USD currency pair below, as well as the US Dollar Index daily line chart.
SUGAR: Sugar may be getting ready to make a run up providing that 17.30 is not broken on the down side, which would then be quite bearish. A huge and declining wedge pattern has been unfolding since the January 2011 high of 35.97. These wedges usually get resolved to the upside, which would mean a measured move high greater than or equal to the Jan 2011 high of 35.97. Conversely, occasionally these patterns break to the downside. Breaking 17.30 to 17.20 would likely portend a massive drop because of the size of the pattern. Thus, we suggest straddling both sides with orders.
ACTION 1: LIGHTLY BUY @ 19.03 stop to open GTC (good-till-cancelled), use 18.03 initial stop loss. move stops to breakeven at 19.60. The market would have to get above 21.75 to confirm a long-term breakout up with targets potentially to 35.95 or greater. We would be happy to see 29.00, the 62% retracement level of the entire pattern and 32.13 (but use 31.98) which is the 78.6% retracement level. You may want to add to the position at 20.02 and 21.77, which would clear out much of the overhead resistance.
ACTION 2: LIGHTLY SELL @ 17.30 stop to open GTC (good-till-cancelled), use 18.67 initial stop loss. Move stops to breakeven point at 16.07. Consider selling more at 17.20 sell stop to open. Long-term target would be around 7.80 to potentially lower. See weekly chart for sugar below.
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