Nearer term $ index outlook :
Bigger picture view since mid May of a month or so of downside chopping (as a more major bottom approaches, see longer term below) continues to play out. In the Jun 6th email, said that there was scope for a week or so of correcting within this larger decline. The market did indeed bounce from that day and though there is scope for another week of consolidating, is seen as a correction (wave 4 in the fall from the May 9th high at 102.25) and with new lows after (within wave 5, see in red on daily chart below). But suspect that further new lows would again be limited as that more major bottom approaches, with poor downside momentum and positive technicals (see buy mode on the daily macd) adding to that view. Nearby resistance is seen at the recent 97.50/65 high and 98.20/35 (both the falling support line from Feb and the bearish trendline from Apr). Nearby support is seen at 96.80/95 and that whole 96.25/50 area (Jun 6th low, falling support line from Feb and a 62% retracement form the May 2016 low at 91.90). Bottom line : view since mid May of a month (or more) of ranging with a downside bias continues to play out with no important bottom…yet.
Strategy/position:
Long Jun 8th above that bear t-line from May 11th (then 96.65, closed at 96.80) and for now would continue to stop on a close 15 ticks below that falling support line from Feb. However, with scope for that more extended period of ranging/bottoming, will switch to a more aggressive trailing stop on a close 15 ticks below a bull t-line from the early June low on a near term move above the recent 96.50 high, to reflect that risk.
Long term outlook:
As discussed above, that view since mid May of a month (or more) of ranging with a downward bias as a more major bottom approaches, continues to play out. In the longer term, the 3 wave upmove from the May 2016 low at 91.90 to that Jan 3rd peak at 103.80 (A-B-C) argues a large "complex" topping, and favor the view of a large rising wedge since March 2015. Though rising wedges are top/reversal patterns, they break down into 5 legs and suggest that final upleg above 103.80 as part of the pattern. Note too this fits of the view of an approaching bottom and that further lows below 96.50 would likely be limited (see "ideal" scenario in red on daily chart/2nd chart below). However as discussed above, at least some further downside is favored but will be looking for more signs of that approaching, major bottom (continued poor downside momentum, 5 wave rally on very short term chart, etc.) on such lows.
Strategy/position:
With a potentially major bottom seen nearing, looking to switch the longer term bias to the bullish side. But the downside pattern from May 9th not "complete"/scope for further (but likely limited) lows, would be patient for a higher confidence entry before switching the longer term bias to bullish.
Current:
Near term : long Jun 8th at 96.80, scope for a further period of ranging/basing ahead.
Last : long May 5 at 98.75.stopped May 16 below t-line from Feb (98.45, closed 98.10).
Longer term : major bottom seen nearing, looking to switch bias to bullish ahead.
Last: :bull bias May 5 at 98.75 to neutral may 16th at 98.10.
