Oil made the absolute minimum correction from 120 to 128 and I have to change the count. Wave A is not finished yet but very likely around mid to end of next week, it will make a severe bottom below 115 (very likely around 112 - which marks 38.2% retracement counted from a 50 base point). That should mark the base for a 2 week upside correction of 50 to 100 (less likely)% of the downmove. A 130 target should be reached within 10 days. Thereafter, look for wave C down to 100 until the end of September.
Stocks trade very close to oil and we have seen a breakout of the NDX , but the SPX did not follow so far due to weak Financials (again analysts were absolutely useless at the estimates for FNM). The odds are still good for a corrective rally up to 1340 SPX up to the end of September but it's a nerve-wrecking procedure. With the VIX at 20, it will even be very challenging, with oil making a countermove soon. Expect a little weakness after the full moon by next Friday. NDX is a different animal. Going forward, it will go higher with the Sox driving higher.Many financials should be part of rally towards target 1340 since a short term bottom for XBD should help to stabilize the performance for most of next week. Two financials stand out this week with relative strength (MS) and relative weakness (GS) which as a single stock is very overvalued - realisticaly should be 120-30 for now (most analysts give it a 180-200) depends how much losses they will have to take on the commodity side. Their outside investments (chinese bank etc.) are also underperforming.