This week has been confusing for the markets. Asian stocks fell while they rallied in the US. Interest rates in Asia spiked but fell in the US while the buck fell but not as bad as one would think given the recent rise in the metals and Nikkei tanking. The S&P hit a high this week of 1760 and closed there. The move up from the Oct 9th low has so far carved out four waves and seems to be on its way to complete five. This move invalidates an ending diagonal alt count that I have been watching—confirmation that equities are going for new highs. And even though the Dow has yet to make a high above the Sept 19th high, it closed at 15570 just below the 88.7% retracement of the move down from the Sept 19th 15709 top. The move up from Oct 8th 14719 does get a little choppy in the middle, however, I have it counted impulsive for now with a series of 1 2s for the start of a wave three of one of five at minor degree. If the Dow makes new highs it should finish off a fifth wave from which at least a major correction is due. Take a look at the NAS below. It is at critical Fibonacci, trendline and Zigzag equality resistance now. If the index breaks above it next week, it could carry to the 4673 which is the 88.7 of the move down from the March 2000 all-time high. If so, then the bullish counts I have going for the other indexes will all be in line for the new highs before they too reach very strong Fibonacci resistance: S&P between 1791-1849, the Dow 16236-16826 and the NAS at 4673. I really do not see stocks carrying past these levels.
The buck took a beating this week but not as bad as analysts would have you believe. Taken in context, the buck should have really tanked this week with the poor fundamentals, the tanking of the Nikkei, and recent rise in gold. It has a lot of analysts scratching their heads. Something is keeping the buck afloat. It performed quite well against the Commodity block this week. After hitting a near low against the Aussie, the Buck finished off the week gaining some back against the Aussie at .9583. And again, much to the markets confusion the Buck rallied strongly against the Kiwi, which fell sharply of the the Oct 22nd high .8543 to close the week at .8287. Even the Pound, which has been coming out with good fundamentals of late, has been stubborn to break the .1.6260 with moves sideways for about a week. The EUR, made a new near term high at 1.3832 Friday and closed at 1.3803. Wave structure has the EUR at turning points. Right now, the EUR is at a zigzag equality level and could very well turn around soon; however, there is some room up without invalidating wave counts at larger degree. If the EUR breaks above the 1.3884 next week, it could move up to the 1.4345 where it will hit some very strong Fibonacci converging resistance. The USD index closed the week well below the 88.7% retracement of the move up from the Sept 9 low at 78.60. If the index moves down below the 78.60, the current wave structure will be invalidated for a lager corrective pattern at Intermediate degree. But not until then. Even though, I start looking at alt wave counts more closely when certain Fibonacci levels are breached, it is prudent to always stick to your main counts until they are completely invalidated by price.
The 10 year Yield hit a low at 2.47 before correcting up to the 2.52%–a very shallow retrace at subminuette degree. The two waves down are inclusive, however, the third wave is shorter than the first wave leaving me to wonder whether the move down will extend considerably. If so, it could put some more pressure on the Buck. Like I said however, the buck fundamentally and intermarket wise should be falling like a rock but it is not. With the political climate, Yellen on tap, QE off the table, Nikkie dropping, gold rising and US yields falling, the buck has been pretty resilient. It makes me wonder why. With all this divergence, it feels like the markets are at a turning point. Many analyst are calling for a major correction now while others are calling for a new rally. At this point it is hard to tell.
Gold and Silver moved up this week. I have these moves up counted as zigzags. If they are to complete, it will be so at heavy Fibonacci retracement and extension resistance with gold holding at 1529 and Silver at 28.707. Both metals have some Fibonacci resistance levels to contain with on the way up to complete their correctives. Gold at 1408, 1455 and 1434 and Silver at 24.95, 25.12 and 26.83 all common Fibonacci zigzag completions. At week’s end, Gold made a near term high while silver did not. On Friday Gold closed up for the day at 1351 while Silver lost, closing at 22.54.