MAY Commentary

One glance at the market and we already have mixed feelings. Where is it going? From an Elliott standpoint, the last peak (red circled) was not the expected target. It makes the last impulse shorter than the preceding wave 1. Then a Fibonacci retracement of 75% took place, immediately followed by a small upward move. From a technical analysis perspective, a midterm trendline was broken (black arrow), a bearish sign in itself. So on one hand we have a bullish sign with a possible wave 5, if we consider that wave 4 ended at the last trough, not yet confirmed, and we have a bearish sign with the broken trend. To further complicate things, the wave 5 would have to be very short (shorter than the wave 3) if we are to have a valid Elliott pattern.

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To complete our picture of where the market is going we need to look at other indicators. The moving averages are always key indicators for a proper evaluation. We observe that the index is above its 13 day ma and almost at the 55 and 144 ma. If it crosses both, it will be a bullish sign. The Relative Strenght Index (RSI) is in the 50's, neutral territory, the direction is upward. The STORSI is however overbought. The Elliott oscillator (similar to MACD) is in negative territory but moving upwards. The next few days will be crucial to confirm... that the market is regaining some momentum in its bullish trend. It could be a short move if we keep in mind our concern about the size of the fifth wave and the fact that the fourth has not been confirmed yet!