30/5/2022

The market is closed today for Memorial day. So this is mostly a planning day.

We can see on the left that SPX has completed a full 1 – 5 wave count on the small-scale.

I believe this complete wave count represents wave 1 of a much broader count.

As such, I expect the correction to not extend very far because it will represent Wave 2 of a much larger count and this means that there is a much more significant Wave 3 move building up which I hope to capture by going long on the S&P500.

I must emphasise that this is a short-term view here and I do retain my long-term view that the FED will be forced into putting the US into recession (actually, probably putting the world into recession) in order to contain inflation.

To put this into perspective, here is the ABC move which led to this recent uptick in valuations.

We can see the ABC move is not only a larger move, but I believe it also to be a larger degree.

So I’m expecting the forthcoming pullback to be relatively shallow and to really represent part of a much broader move upwards in the equity markets before the FED-induced crisis really sets in.