I'm wondering about possible scenarios for a full playout of this test and retest at SPX showed here on Friday:



... and the only reason for a quick drop from here to the lower ML could in my opinion be a failed 5th wave at SPX and ES. Because on many other indexes the recent rise looks like already completed 5th wave:

At the end of the day on Friday Crude reached exactly the geometry I was showing here:



Was this a classic rush to the dance floor before the music starts?
Even an initial rise on Monday could be just a finishing move to this main line, especially if Gold also chooses to do so:

And the million dollar question is: how the market will react to a possible breakdown of this 2 long term TLs and a very probable in such case collapse in Bond prices???

Great posts, jarek. The curious thing is, if 'risk' goes off i.e. sell crude, stocks, grains, and perhaps gold, then money usually flows into bonds. If they break down, money is flowing out of everything, where does it go? It has to go somewhere. This is a very curious situation we have here.

I agree that the Midcaps look 'done', in that they are ready for the roll they look to have started. I made that comment in last week's topic, nearer to the top, asking if this was an extreme, based on what you charted. I will say that I thought a put play end of last week was potentially worth a shot. It will be very interesting to see how the budget 'resolution' and upward Sunday night GLOBEX/Monday bias affects this thing later today...

I find this a bit scary, as we look at jarek's 10-year chart.

http://www.zerohedge.com/article/exclusive-bill-gross-now-short-us-debt-hikes-cash-73-billion-all-time-record

Futures start out on a gap up, strong. No surprise there, it's the only way I think they could have opened. Now, do they run up +10, and then another +10 tomorrow, for a big +20 day? We'll see, but I'm thinking it sure is one possibility.

In the meantime 27.25-28.25 is a level I'm watching. Above that, depending on how long it takes, about 30.50-31.75.

ES stalled a little at the first area, but then went above it. Now up +5.00. I'm thinking the +10, +10 scenario is getting more and more likely... Watching the next area now.

it's interesting to read about gross being short bonds now....after this move...will they crawl down the red median line to the lower purple schiff set line? any way you look at it, bonds are in an interesting place

Nice charts, rat.

Speaking of all this, recall last week when I said I think we are either at or near the peak of the commodity run, or about to explode into a huge final climax. This article titles it well: 'inflationary hysteria'.

http://www.zerohedge.com/article/premarket-summary-inflationary-hysteria

Very curious behavior in the ES. It went right between my two areas, rolled over, bounced up and set a lower high, and is now rolling back down. Will it get some buyers near the low, will it drop to a bullish 'W2' ABCD, or will it drop in a strong 'W3'? Recall I said that I thought puts weren't necessarily a crazy idea. Although I think they want to set another new high for this (don't they always...), the 'look' of that Midcaps chart makes some more downside certainly not out of the question. Just some thoughts. I prefer to go with the trend, but it's so set up for a roll...

Originally posted by jimkane

... so the Gross post will be short...

I see that we have a new definition of "short"