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Monday, January 30, 2017

Market update 1/30/2017

Markets are starting to look toppy, but so far we haven't seen much weakness. That means we probably haven't seen the reversal, and that's part of the reason I've raised our wave D target on the Dow. Futures are only down slightly this morning, and that doesn't confirm a reversal into a panic wave.

So we're looking for a slightly higher high, after consolidating into a tight down turned range (or wedge), on Friday, which would be a (tiny) sub-minuette wave 4. See the annotation added to the chart for a full explanation... Financials to lead as per the chart tweeted late Friday afternoon.

Once we see a reversal, look for a 500 point correction - in a panic wave E - near the bottom of the larger pattern. Risk is to the downside.

Looking at some longer term charts:
Semiconductors re-tested the top trend line (in blue). I'd be adding to shorts (called "scaling in..."), not covering here. $SOX is also a market leader, so it may lead the way down... $SOXS is more volatile than most indices, and one of the more difficult charts.... Know your risk tolerance, before you trade into 3X $SOX (bear) $SOXS. 15% moves are commonplace in a reversal, and we could see much bigger moves shortly.  

If you're trading the Russell; See the short term pullback target from last weeks update. From there I'm looking for a retest of the upper blue triangle line on this broadening top in blue.

On the next chart you'll see I've raised the upper pattern line, and there's even a good possibility that upper blue line is taken out in a throw-over, as the bottom line was in what I have marked wave "4". If you're asking for predictions, and timelines, you're not trusting the charts, and If you're afraid to sell into strength, I guarantee you're going to miss the sell target. Keep your emotions in check, and in the mean time support is the SMA50 around 1355.
The 3X Russell bear is more volatile than the SPX bear, and a good choice for those who want a little more bang for their buck. The $RUT is also where risk off starts, as many small-caps are buried in debt.

Speaking of debt: Investors seem to have forgotten about risk in the Euro-zone, Portugal, Italy, Greece, and Spain (PIGS), to mention just a few.... don't forget Cyprus, and Iceland (both bankrupt)!
As I pointed out last week, emerging markets aren't trading at new highs, regardless of what the dishonest financial networks are reporting, and none of it's Trump's fault, by the way.
3X emerging markets bear is another option, for traders who are looking for more bank for their buck, but for now I'm going to keep that chart close to my chest.

Good luck this week Traders, AA

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