There is no doubt that something is amiss. The stock market and the Buck are both ignoring the horrific macro numbers coming out of the States and the rest of the globe for that matter. And what gets me the most is how the market ignored the Fed’s dovish statements all week. The Fed knows that it cannot raise rates and to me Yellen pretty much admitted it this week with her very dovish statements. According to Yellen they haven’t even started considering when they will raise rates and rightly so because if they do that will push equities over the edge it is going over soon anyway. You know, I can remember after QE 2 was over. Macro numbers came out pretty good for strip of time—almost a year. This time things are tanking much faster than the last time around and it hasn’t even been 6 months. Moreover, not only have the macro numbers been bad but they have never been really good at all since last October. And they have been downright frighting in EUR and Asia. Even though employment numbers have been pretty good, they are definitely not a sign of productivity gains but more a sign of mal investments as in big oil. It is not only the oil industry that bet big in the big boom that never came. Employment numbers should start turning down soon too. Wages have been weak in general and the recent rise in food service wages is most likely a sign of a wage top. And yet, nothing has been able to bring the Buck down leaving many analysts scratching their heads. And since the 95.48 high the Buck, even though splintering, is holding above key support failing to give back much against its peers as it closed the week at 95.29 just 19 pips away from its 11 year high. Par with Yellen’s dovishness, however,the S&P 500 hit an all-time high Wednesday at 2119 and sold off a bit the rest of the week closing Friday at 2106 right up there near its all-time high. Meanwhile, crude failed to move up above the 54 high and even sold off while the stock markets ran to a new all-time high. the US 10 year yield, after hitting the 2.15 on the Feb 17 slowly dropped to the 2.00 by Fridays close but still looking bullish on the chart. And gold silently closed 11 bucks up for the week, however showing no direction midterm.
Five waves are now complete at the 2119 all-time high for the S&P500. The index should retrace at least to the 2065 38.2%. The 50% and the 61.8 are the maximum targets for a bounce to new highs. Anything past that and the index could head down to test the 1970s. From the bigger time frames, the Index is running out of steam and waning on momentum oscillators. Technically the index looks like it needs to correct on both the big and small time frames.
US Crude NYMEXMINI is still stuck in a range between the 54.25 and the 47.37. At this point, it is hard to tell where this is breaking. However, the mere fact that stock market hit new all-time highs and that Crude failed to make it above the 54.25 and even turning down the day the S&P made an all time high is worrisome to say the least. From the daily chart, it could be that price is in a counter corrective B wave of a zigzag up to the 60 as labeled or in a series of 1-2s of five down to the high 30s. I am favoring the zig up to the 60.63 for now because this contraction looks like its cutting out a triangle for its Green B wave which should complete near the 48.70 projected E wave target. Before then however, price should move up to about the 53.75 in a D wave. The longer this break out takes the higher the chances get price is going up in a zig to the 60 handle from which it should roll over once again.
Gold even though gaining this week is really not showing much in way of direction. The metal has been pretty much in a range dating back to the 2013 low. However, it has been drifting downward possibly carving out a larger triangle structure from the 2013 low. At smaller degree, the metal appears to be moving up to about the 1249 in a counter corrective Blue B. From there price should roll over testing the 1131 low.
The US dollar was mixed this week closing up the AUD, JPY and EUR and down against the NZD, CAD and GBP. The DX.X closed up near the 95.48 11-year high in spite of Yellen’s dovish comments this week. However, the pattern the index is carving out now is still signaling a reversal down to at least the 93.25. This move is taking the form of a flat structure for a clear three waves are visible down to the Blue A at the 93.25 and another clear 3 waves up are now visible also for a near complete Blue B. This B has room up to the 96.34 138.2% Bvs.A before it gives way to its C wave down to possibly the 92.40 from which the index should resume its upward march. The 91.51 should be it if the buck is to make a run for higher ground. Anything below that and the USD could pull back significantly. The CBOE US 10 year yield has cut out five up and is now in a corrective like series of what should be a 2 wave retracement of 1. It doesn’t look like the corrective is over, If not then counter corrective Black B should complete soon near the 2.05 before it rolls over in a C wave decline to complete this first series of the five up we are expecting. The benchmark could head up there now leaving magenta 2 at the 1.93. A clean break of the heavy black trend line should signal in a 3 wave run to about the 2.48. For now, however, we do not think this Magenta 2 is done and are looking for a move down to the 61.8% 2vs.1.