Nearer term $ index outlook :
In the May 2nd email, affirmed the view over the last few weeks of a major bottoming (eventual gains above the Jan high at 103.80), adding that any further near term downside would be limited and part of this bottoming. The market did slip to a marginal new low at 98.55 on May 5th, testing that long mentioned falling support line from Feb and has reversed higher since (see daily chart below). Note too I have been discussing (and often do across markets) that there was "still no confirmation of even a short term low", leaving open scope for more bottoming. In this case, the bounce over the last few days is occurring in 5 waves/impulsive (see hourly chart/2nd chart below) and along with positive technicals (see buy mode on the daily macd) greatly increases the likelihood that the final low in price is indeed in place at (larger bottoms begin with smaller ones, see hourly chart/2nd chart below). Nearby resistance is seen at 99.60/75, 99.90/05 (50% retracement from the Apr 10th high at 101.35) and the bigger picture, bearish trendline from Jan (currently at 100.80/95). Nearby support is seen at 99.05/20 and 98.40/55 (both the recent low and that falling support line from Feb). Bottom line : view over last few weeks of an important bottoming (and eventual gains above 103.80) remains and with the final low finally seen in place.
Strategy/position:
Reached the buy target from the May 2nd email at 98.75 on May 5th and for now, continue to stop on a close 20 ticks below that falling support line from Feb. However, will want to switch to a more aggressive, trailing stop on further gains to maintain a good risk/reward in the position.
Long term outlook:
No change as that view of a more major bottoming and eventual gains above the Jan high at 103.80 remains. Note that the decline from Jan is seen as a correction (wave 4 in the rally form the May 2016 low at 91.90) and targets those new highs (within wave 5), while the market also tested that longer term, nearly 2 year bull trendline at the recent lows (see daily chart/3rd chart below). Also interesting to note that many important lows have occurred in May over the last number of years (see weekly chart/4th chart below) and with all adding to the view the important low is in place. From a very long term perspective however, the gains above that 103.80 high may be limited and part of a more major topping (years ?). Lots of long term negatives add to this risk and include bearish long term technicals and the failure to build in the Jan upside break of the Mar/Dec 2015 peaks at 100.50/poor upside momentum. Note too that new highs above 103.80 would be seen as the final upleg in the rally from May 2016 (wave 5) as well as the final upleg in the whole really from the May 2011 low at 72.70 (wave V). And finally, very long term resistance is just above that 103.80 high at the ceiling of the 6 year bullish channel (currently at 104.75/25) and would an "ideal" area to form that more major (potentially multi-year) top (see weekly chart/4th chart below). At this point however, this is just a longer term risk to be aware of and will be looking to reassess on gains above 103.80 (more info available at this time). Bottom line : downside action since Jan seen as a large correction and with an eventual resumption of the longer term gains above 103.80 ahead (and may have finally completed the bottom).
Strategy/position:
Also switched the longer term bias to bullish on May 5th at 98.75.
Current:
Near term : reached buy target from May 2nd email on May 5th at 98.75.
Last : short Apr 11 at 100.75, took prof Apr 26 above multi-day t-line (98.80, closed 99.05, 170 ticks).
Longer term : bull bias May 5th at 98.75 for eventual gains above 103.80.
Last: :bull bias Feb 7th at 100.35 to neutral Mar 28th at 99.75.
