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First published on Saturday April 8 for members of ElliottWaveTrader.net: I have read in many places on the Internet that the metals have certainly broken out. But, as you know, I am not quite convinced. Now, that does not mean I am bearish. It just means I still think there could be more downside seen before a true break out is seen.
As I have been noting for the last few weeks, silver has been providing us with the clearest of the patterns. And, last week, I noted that, under both patterns, silver still looks like it needs one more push higher before it is going to make its decision. This past week, we got our push higher to complete what is best counted as a 3rd wave off the March lows. But, as we know, 3 waves up does not constitute a bullish trend. Rather, we need 5 waves up to complete.
Over the last year we transitioned from the stock market angst of 2015 to the bullish breakout of 2016. For NFTRH, the real proof in the pudding was the ramp up in the cyclical Semiconductor sector’s Equipment sub-segment (Applied Materials, Lam Research and the like). Specifically, we tracked a trend in Equipment orders and projected a bullish Semi sector a year ago. The logical extension of this was a bullish stock market, since the Semis are a leader.
What a difference a year makes. Reference AMAT Chirps, B2B Ramps, Yellen Hawks and Gold’s Fundamentals Erode from last May. Our best target for the SOX index was around 940 and late-arriving momentum players (and their ‘quant’ machines) have driven the index beyond reason of late, to a high of 1017 last month. It is time for a cool down in this leader; potentially a real deep freeze because it has been running way too hot.
Lower lows on ES and NQ in globex overnight and that was bearish, kinda, or at least it would have been if the lows hadn’t been marginal on positive RSI divergence that has since delivered fixed buy signals on NQ and TF, and setting up double bottoms that have now broken up on ES, NQ and TF. The breaks are marginal on ES and TF so far with NQ almost at target, and if bears are going to turn this today then it should be here at the test of the 2350 SPX area. A hard reversal here would looks for further lower lows, but a sustained break up would likely deliver the day to the bulls. All the targets and setups are marked on the charts below.