Who said this market would be easy? It felt like there was lots of short covering today, which might have been needed to alleviate some of the bearish sentiment.  Here is what Bears are looking for on this 10-minute chart of the SPX. There are few catalysts next week until the Friday employment report, so a choppy triangle next week does make sense. Today’s rally makes a nice 3-wave pattern, which suits the a-wave of a triangle.

EWT Lesson: Today’s rally looks like a bearish wedge but those can only be found in fifth or C waves. It is not the c-wave of a flat because subminuette ii is already a flat, and you cannot have two flats in the same 5-wave pattern. Subminuette ii must be a flat for this bear count to work. Otherwise, subminuette iv would violate the price territory of subminuette i.

Notes
This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

Author Notes
- This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).
- There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

Leading Diagonal count still looks good. Market did not make a new low so a new low in a c-wave is required. The alternate count is very bearish. It has the market setting up for a 3rd of a 3rd wave lower. In case this count plays out, I want to build a 30% position short the SPY (ETFs or Jun/July Puts). I’ll accumulate as the market retraces into the target box. If the primary count plays out, I’ll look to sell somewhere near the middle of Minuette (c) down. If the Alternate count plays out, I’ll add aggressively on the way down up to a 100% position.

Remember our old friend Teddy? The TED spread (defined below) has been under 40 for the past 11 months, but today it reached its highest level since July 2009:   39.02 basis points

TED 3-year Chart

TED 6-month Chart

Chart Source: Bloomberg

Wikipedia: The TED spread is the difference between the interest rates on interbank loans and short-term U.S. government debt (“T-bills”). TED is an acronym formed from T-Bill and ED, the ticker symbol for the Eurodollar futures contract.

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There are a couple of things I want you to notice. XAGUSDO is a weekly chart that goes back to the low in 2008. Notice the huge triangle I’ve drawn in. The target on a breakout is $30 an ounce on Silver. The Trade Triangles has us on a monthly sell in January, but a close this month over $18.45 would change that to a buy. The weekly is on a buy and the daily will shift to a buy shortly.

I believe the physical is in short supply and two big banks are massively short the metal. Fireworks could be just ahead.

Full disclosure: I own shares in GDXJ and GRS and the precious metals.

The leisurely time scale says a lot about China as an acquirer. The price (representing an enterprise value about 70 per cent of book value) and deal structure (including $200m of vendor finance) show that Ford was pretty desperate to offload the loss-making Swedish automaker. But Geely faced two big hurdles. The first was intellectual property. Chinese start-ups, not just in cars, have flourished by pursuing a simple but effective strategy: take designs and parts from established global manufacturers, then reverse-engineer them. Disentangling technologies owned by Ford from those owned by Volvo was hard enough; the seller needed assurances from the buyer that it would then respect them.

The second hurdle was Geely’s evolving status. As a private manufacturer, founded in 1986, the company has grown up outside the direct control of China’s economic planners. But the country’s biggest auto deal to date is not a strictly private transaction. Geely is putting in about half of the $1.6bn of equity; the rest is coming from provincial governments that will build plants to assemble Volvos for the local market. On top of that, Geely is getting about $900m in working capital to tide it over Sweden’s traditional summer production shutdown, courtesy of a consortium led by state-owned banks. Geely was not on the list of eight state-appointed industry consolidators last year. Now, in effect, it is. Its deal to buy Volvo is not an open-and-shut case of guo jin min tui – the state advances while the private sector retreats. But the boundaries are increasingly blurred.

The video is short and to the point, nonetheless I think you’ll have a lot of good takeaway information. As always the video is free to watch and there are no registration requirements.

I would really like to hear back from you with regards to your thoughts on this video. All the best,

Click here to view the embedded video.

Click here to view the embedded video.