In today’s big picture update, I bring back into focus the market’s reaction to economic data which shows that inflation remains stubbornly high as evidenced by Friday’s release of the PCE data. I update the picture for both the SPX and NDX where both continue to suggest that the previous Intermediate B wave is complete, finishing in a 5th wave failure. This then suggests that the equity markets are now in the beginning stages of an Intermediate C wave decline. I am able to count 5 waves down on the hourly charts, but at this juncture I need to continue to leave open the potential for minute wave 5 to extend further to the downside. If Friday’s lows complete Minor first waves, then Minor 2nd waves are in order, and I’ll be looking for an a-b-c rally to carry both the ES and NQ back towards Fibonacci retracements labeled on both charts.
Treasuries continued to price in the expected 50 bps hike in rates due at the March FED meeting. The EW picture though remains unresolved in terms of the countertrend moves in both treasury prices and yields. That may remain unresolved a bit longer, but I’m continuing to keep an eye on the potential for a solid turn higher in treasury prices and a move lower in yields. Remember off of the October lows in bond prices I have been looking for a countertrend rally in bond prices and decline in yields. That remains possible so long as the October lows remain in place.
Gold and Silver continue to correct within their prospective EW counts. I again review the counts and Fibonacci retracements and extensions.
The US Dollar index also continues to move through a smaller rally phase, but one that continues to carry the potential for a move back above 106 and upward towards 108 to 109 before again declining and likely breaking below 100 to complete the larger Minor B wave in process.