The Federal Reserve takes center stage this week, as Fed Chairman Jerome Powell testifies on the state of monetary policy before the Senate Banking, Housing and Urban Affairs Committee on Tuesday and the House Financial Services Committee, each at 10 a.m. New York time. It will be his second semiannual report to Congress.

We live in an age flooded with information about monetary policy. Far gone are the days when analysts speculated on the likelihoods of Federal Open Market Committee action based on how fatly the chairman at the time, Alan Greenspan, had packed his briefcase.

So the semiannual report is valuable in providing a big picture view of the forces that go into regulators’ thinking, but is a smaller piece of the speculative puzzle than it once was.

Even so, the semiannual report, combined with the Fed Beige Book, a narrative overview of conditions in each of the Fed’s 12 districts, provides the most extensive overview of Fed thinking on the economy. The Fed Beige Book will be published on Wednesday at 2 p.m.

Two other major reports will pique trader interest during the week: Housing starts on Wednesday and retail sales on Monday, each at 8:30 a.m.

And there’s another event from Fedworld: Fed Vice chairman Randal Quarles will give introductory remarks, via pre-recorded video, at the Alternative Reference Rates Committee Roundtable of the New York Federal Reserve Bank, on Wednesday at 9 a.m. The Roundtable meeting will be streamed here.

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11:15 a.m. New York time

SPY remains within yesterday’s range, and the analysis I posted then is unchanged. The ambiguities I noted on the chart have yet to be resolved. Waiting is.

By Tim Bovee, Portland, Oregon, July 13, 2018

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3:15 p.m. New York time

Why Elliott wave analysis is an art not a science.

SPY today exceeded its high of July 10, which means that the 2nd-wave countertrend correction did not in fact end on July 10, may have ended today, but maybe not. That interpretation will await further developments.

I’ve been working with Elliott wave analysis for more than 30 years, and reading the best in the game for that period of time. The shifts in interpretation that we saw today are commonplace.

Elliott wave analysis is not in any way a sure path to perfect market decisions, no more than any other way of assessing the market. What Elliott does is provide an ongoing context — a narrative — about the path the market has taken and what the next steps will be. As for the timing of those steps — it’s not always clear. Most reversals have a large degree of ambiguity that will be resolved over time.

So what I can say with certainty is that once the 2nd wave correction upside is complete, it will be followed by a 3rd wave down of the same Minute degree. Also, the count within the Minute wave suggests that it is near completion, so the reversal will come soon.

10 a.m. New York time

From Elliott wave analysis of SPY, I conclude that  the 2nd wave counter-trend correction in the Minute degree {+1} to the upside that began on June 25 ended on July 10.

The Minuette 3rd wave to the downside has begun. It is part of a 3rd wave down in the Minor {+2} degree. The movement has traced a 1st wave down in a lower degree — Subminuette {-1} or Micro {-2}.

All of this is part of the working through of a major bear market that began on Jan. 26.

I plan no trades today, but I anticipate that any trade I make for quite some time to come will be bearish in its expectations.

The SPY chart covers 20 days with one-hour bars.

By Tim Bovee, Portland, Oregon, July 12, 2018

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10 a.m. New York time

SPY remains within the parameters of yesterday’s chart analysis. I anticipate no trades today.

By Tim Bovee, Portland, Oregon, July 11, 2018

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10:15 a.m. New York time

I have exited ARKG for a small profit and shall update the entry analysis with results within the next half hour.

10 a.m. New York time

I’ve reworked the charts for both of my positions, and neither requires adjustments at this point.

SPY is in a C wave within a 2nd wave countertrend correction. Once that C wave has ended, I expect the 3rd wave down to new lows to begin.

The SPY chart spans 20 days with hourly bars.

ARKG is marking a B wave to the upside before beginning a 3rd wave down. I count the C wave has having nearly completed five waves up, and so I shall take my profit today in order to avoid the coming decline.

The ARKG chart is one year with daily bars.

By Tim Bovee, Portland, Oregon, July 10, 2018

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11:10 a.m. New York time

SPY gapped to the upside this morning, casting doubt on my Elliott wave count. I shall wait to gain some clarity about the chart before posting a re-analysis. ARKG is moving as expected.

I anticipate no trades today.

I had noted last week that I was taking a look at resuming earnings plays, with no great hopes that it would be possible in the current markets.

Initially, I plan to use Elliott wave analysis to gain a sense of what direction I expect the price to move, and the last two historical moves to gain a sense of magnitude, and then, on paper, see how it successful that prediction was.

PEP published earnings this morning before the opening bell.

I counted it as being in a 4th wave correction to the upside on the one-year chart, and shorter term, in a sideways movement within that wave. The last two historical moves were each 1%. So my expectation was for a small move of indeterminate direction.

PEP opened 3.9% below the pre-earnings close, but the test is where does it close at Friday’s expiration, the presumption being a very short-term play. I’ll keep track and post a table of all outcomes over the weekend.

By Tim Bovee, Portland, Oregon, July 9, 2018

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Two price reports dominate the week’s economic reporting: Consumer prices on Thursday and producer prices (final demand) on Wednesday, each at 8:30 a.m. New York time.

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10:55 a.m. New York time

I anticipate no exits from my existing positions, SPY and ARKG, and no other trades today. See the chart analysis posted on Thursday.

On Saturday I shall post The Week Ahead, a look at next week’s econ reporting.

By Tim Bovee, Portland, Oregon, July 6, 2018

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10:25 a.m. New York time

I have revisited the lower degrees of my SPY and ARKG analysis. Neither requires a trade this morning.

SPY has completed its 3rd wave at the Micro level and is now tracing out a counter-trend 4th-wave triangle, all of that within a 3rd wave decline at higher degrees.

The chart covers 20 days with one-hour bars.

ARKG appears to have completed an A wave of the Minuette degree as it begins to work through a 4th wave correction at the Minor degree.

The chart covers one year with daily bars.

The next earnings season begins next week. Since the bear market began on Jan. 26, I’ve stayed away from earnings plays. I plan to revisit the issue this time around. That’s no guarantee that I’ll add such plays into my mix, but I want to see if I can get some sense of predictability that would allow me to profitably add them back into my trading mix.

By Tim Bovee, Portland, Oregon, July 5, 2018

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10:10 a.m. New York time

My Elliott wave analyses of SPY and ARKG, posted June 25, continue to play out. I anticipate no trades today.

A reminder that the U.S. markets will be closed tomorrow — Wednesday — for the American Independence Day celebration.

By Tim Bovee, Portland, Oregon, July 3, 2018

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