Tuesday, 14 October 2014

S&P 500 decline needs sequence of 4th and 5th waves before short term bottom is reached

Last Friday morning in my post titled "S&P 500 beginning strongest & longest portion of current decline?" I wrote "From September's peak, we have seen a sequence of first and second waves, now wave three is likely beginning, and then we'll see a matching sequence of fourth and fifth waves."

Below is an updated chart showing Friday's Elliott Wave count again, illustrating that wave three is now indeed underway, also that a sequence of fourth and fifth waves is required to complete the current decline and set the scene for a short term bottom. You will know why I expect only a short term bottom if you saw my weekend post titled "S&P 500 rally from 2009's low is complete, market now embarking on 60%+ decline toward 600". This is merely the first impulsive decline of many to come in next couple of years.

Gold testing key short term up trend line

Yesterday I pondered the question "Gold entering the sell zone again?" and illustrated with daily and weekly charts.

The hourly chart below zooms in to show the trend line that may prove to be the line in the sand determining whether Gold rallies further or begins a new leg lower.