Saturday, 11 July 2015

ASX 200 trending lower, break of long term trend channel support will flag 50%+ decline

Daily chart shows the ASX 200 trending lower. All charts include after hours trade.

Weekly chart shows that the market is testing trend line support, both at a conventional trend line drawn from price extremes, and the lower line of an Elliott Wave trend channel, the line connecting the lows of waves 2 and 4.

Monthly chart illustrates my favoured wave count, one whose likelihood will gain stature if the market breaks below the weekly chart trend lines. When I say favoured I don't mean "I'd like it to happen" simply that I judge it most likely. I'd prefer a raging bull market, much easier to trade. But the whole world is awash with debt, Australia moreso than most places, and the time appears ripe for some global debt deflation. Won't be fun, if it happens, but there's no good sticking your head in the sand and ignoring the warning signs.

4 hour chart shows my favoured short term Elliott Wave count. It is a rare and beautiful thing when a market shows such clear waves. Won't last forever, but while it lasts, go with it, especially while it agrees with the larger degree (daily chart) trend. Another 5 waves lower should begin soon, perhaps from slightly higher levels, perhaps not.

S&P 500 rallies on Friday to test trend line resistance on decreasing volume

Daily chart of the cash S&P 500 shows the market rallying on Friday toward trend line resistance on decreasing volume. To state the obvious, a rally on decreasing volume is losing strength.

Daily chart of the futures shows a clear set of parallel trend lines. I've illustrated in blue the resistance level also shown on the cash market chart. The futures show a gap down in late June. Will it prove to be a breakaway gap? Or will it be filled? In any case, the near term trend is down, and in my view will remain down unless the futures close above the nearby overhead parallel trend line.

4 hour chart shows my favoured Elliott Wave count. I expect another stronger five waves lower to begin soon, likely after further rally as illustrated, though that rally is not required. A close above the trend channel would have me looking long instead. Let's see.

Hang Seng plummets, no visible evidence of a lasting bottom, 60%+ decline just beginning

Daily chart shows that the Hang Seng had a remarkable week, plummeting to test trend channel support, then rallying in to week's end. There is no visible evidence of a lasting bottom. The first clue that a bottom may be in place would be a close back above the trend channel. I don't expect to it, the trend is down, but let's see.

Weekly chart shows my long standing wave count and expected scenario for this market. It is no surprise that such major trend line support would not break on a first attempt. I expect the next attempted break in coming weeks, but let's see.

AUD/USD trending lower, possible trend channel support around 72.80

Daily chart shows AUD/USD trending lower, with no visible evidence of a lasting bottom.

Weekly chart suggests possible trend channel support around 72.80.

Gold rallies from trend channel support to test trend line resistance

Silver rallies from trend channel support to test trend line resistance