Both the S &P and the Dow seemed to have found a bottom this week with the S&P hitting 1646 and the Dow 14723 to complete Elliott waves and have made what appears to be impulsive moves up. The Dow broke some key support and had to be recounted with my favorite being a flat for a fourth wave at Minor degree. Consider that there are good alt counts that have put both the indexes in bear counts now. However, until some key support is breached confirming the move down, the dominant trend is still up and I am looking for the indexes to make one more push up to some very heavy Fibonacci resistance: Dow 16284-16874 and the S&P 1810-1837.
The US Ten Year Yield has been trading sideways of late. We have five waves counted as finishing an A leg of a Zigzag 4 at 2.58%. The move up looks very corrective reaching as so far 2.67% and pulling back a bit to close at 2.65% in what appears to be a zigzag on the 15 minute that has so far carved out it’s AB and is now trying to move up for its C. We are looking for the Yield to push up to 2.73_78 area at the 38.2-50% A retracement If this smaller move up is it then it should turn soon. However it could turn complex and go as far as the 50 to 61.8% Fibonacci retrenchment of the A move before turning down to complete at the fourth of one lesser degree.
Despite the government haggling over Obama Care, Debt ceiling and the media’s exaggeration of the dollar doom, the buck has been pretty resilient as of late. The USD Index looks like it made a bottom at 79.63 last week. The move up from Friday looks impulsive reaching so far 80.57 and this week’s move so far has pulled back in a corrective three closing up today at 80.37. We are looking for a break up above 80.57 for a bullish third wave. If the index falls below 79.93 the buck can still be counted for one more push to complete the count it is in now.
Both the pound and the Euro are making impulsive moves down. The pound looks like it has completed its 1 of three at 1.5915 and is now at 1.5963 and heading up in three waves to complete wave 2 before heading down for 3 of 3. Corrective targets are at the 1.5983 the 38.2 Fibo retracement of the five wave move down. The EUR hit a low at 1.3485 in five waves and also appears to be correcting a 1 of 3. The move up does look like a three with targets at 1.3531 and 1.3545 the 38.2 and 50% Fibo retraces of the impulsive move down of same degree. The CAD also seems to have broken down against the Buck. It looks like it has traced out a leading diagonal 1 off of the 1.0182 low and is currently finishing a 1 of 3 on the four hour. Both the AUD and the NZD are holding out but are failing to break out above the wave 2 October 8th highs and are still well below the apparent Sept 18th tops. They look like they are going to roll over. The JPY looks like it has finally stabilized off the heavy Fibonacci Triangle support at 96.49 and is now heading up in nice impulsive moves on the 4 and 1 hour. It hit 97.50 today and is now taking a breather. Fundamentally the globe has been coming out with mixed to bad numbers—the US being no exception; and to top it off, Janet Yellin a supper dove was appointed to take Bernanke’s spot next year. Despite the negative talk from all ends about the buck, wave structure so far is telling a different story. This might be the start of another major dollar move on the bulls back.
Both Gold and Silver fell today to new lows off of their August 28th highs. Both have been unconvincing so far in their moves down. Even though the counts you see are fives, keep in mind that both the metals are still in corrective forth waves territory. We have the moves up counted at completed threes so far, however, the moves down are very choppy and corrective like. The metals could be tracing out complex pattern to the upside sill. There is room without invalidating the count at minor degree, so keep it tight on the risk if trading them.
I am favoring the more bearish move for the fact that the move down has been in spite of the Fed’s tacit admission that QE is off the table along with US republicans about to surrender to the Democrats printing wishes. Now, you would think that on the back of all this news that the metals should be bullish while the Buck bearish, but it they are not. This could only mean that deflation is in control.