Weekly outlook for May 7 May 11, 2018

Transcription

1 Weekly outlook for May 7 May 11, 2018 Summary The S&P500 index is expected to declare its breakout direction soon. The triangle pattern is defined by 2725 on the upside and 2575 on the down side. A weekly break of either of those boundary lines will show which way we go next.. Oil is expected to have a continuation high; there may later be a retracement. GOLD movements will depend on the US dollar. It could stay within last week's range first and later make a breakdown move if the USD continues to rally. Page 1 of 8

2 SP500 index (ES mini, and SPY): INTERMEDIATE-TERM TREND DIRECTION: neutral Trade strategy: stay on sidelines The intermediate-term trend is neutral. The Index continues in consolidation mode. But the triangle formation is still there, and at some point the market will break it... in one direction or the other. Based on the Elliot Wave principle, we could be seeing the latest wave 4 formation, with a wave 5 rally to follow which could result in a long-term double top pattern formation or a somewhat higher high. Nevertheless the rally should be the last one for this bull market and a big correction should be expected to follow. A weekly close above the 2750 area will confirm the wave 5 rally. Page 2 of 8

3 SHORT-TERM TREND DIRECTION: flat Trade strategy: buy on dip SP500 index has formed a triangle pattern from from November 2016 to early May So far the price remains inside the formation and is waiting for the next breakout direction to be declared. Daily PMO and Slow STO indicators turn up and it looks more likely the index is going to make an upside breakout soon. But I keep a neutral attitude until the index has a true breakout direction. The areas around 2725 and 2575 will become two key levels for this week's trading. A breakout above 2725 and close above it on weekly basis will lead the index to a final long-term wave rally. Weekly Option Strike price Expiration Strike price Expiration 2700 Meanline /7/18 **** 5/9,11/ **** see daily trading plan Page 3 of 8

4 2. Oil ($WTIC, CL) INTERMEDIATE-TERM TREND DIRECTION: up Trade strategy: buy on short-term pullback The intermediate-term trend for Oil is up and bullish. The momentum trend indicator chases the price, which means internal still has a strong buy interest. 20-wEMA line will continue to hold up if there is a pullback. Buying on any short-term pullback will still be seen. Page 4 of 8

5 SHORT-TERM TREND DIRECTION: up Trade strategy: buy on the broken triangle resistance Oil had a minor pullback in early days and made a new breakout on Friday, breaking previous resistance. The flag that has formed is a continuation pattern. Upside target remains $75. Page 5 of 8

6 3. GOLD (GC, GLD) INTERMEDIATE-TERM TREND DIRECTION: flat Trade strategy: none Intermediate-term trend is flat. The weekly PMO indicator continues declining, but still stays above zero and shows positive. It suggests Gold may continue going sideways to wait for the slow STO to move into oversold area or PMO indicator to move to zero line, and then rally from there. $1275 will be next major support if $1300 level fails to hold up, but in any event I expect support in the $1275 area will prevent any major decline. Page 6 of 8

7 SHORT-TERM TREND DIRECTION: neutral Trade strategy: none Gold managed to hold price above the bottom line of the four-month trading range. Daily PMO indicator is declining below the zero line, but is not oversold yet. If the strong US$ continues, gold will suffer. Page 7 of 8

8 WEEKLY ECONOMIC REPORTS Page 8 of 8