Equities Fall, Dollar Struggles Waiting Bernanke’s Finally

The S&P, Dow and Transportation are so far in third wave declines from their Nov 29th, Dec 2nd highs. The S&P and Dow appear to need one more push on the one hour at subminuette to complete third wave structures although hitting minimum Fibonacci levels which imply that the third waves could extend to lower levels before completing third waves. After a deep wave two retracement to the Dec 9th 1811 high, the S&P has moved down in four waves to consolidate in what looks like so far a fourth wave triangle closing Friday at 1775. The Dow also has been moving sideways recently in a fourth wave coming off of its Dec 9th minuette wave 2 retracement. As noted, both indexes need to make one more push down on Monday to complete third waves. If the indexes move up above their minuette wave one bottoms then they could very well be extending in one two sequences. But keep in mind that if they continue and move past the minuette wave two tops, then the indexes could move up to new highs. However, so far the bias is still down. Transportation second impulse down has already carved out what looks like a one two sequence. A move down past the 7036 will confirm the more bearish counts putting the index in a third of a third acceleration down. The NAS is yet to complete its first wave down from its Dec 9th 4081 high and appears to be in its fourth wave of 1, which so far is not complete. A fifth wave move down should reach the 3980 max before moving up in a second wave retracing as high as the 4045 or more before moving down in a third wave.

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The Dollar index appears to have made a low at 79.75 having moved up in five waves on the smaller fractals retracing this Friday to previous fourth wave closing at 80.18. The buck was mixed this week giving up ground to the Commodity Bloc while moving up in choppy fashion against the European currencies. After a deep wave 2 retracement, the Euro moved down on the 11th hitting the 1.3737 in what looks like a one two sequence. The pair moved up in three waves to the 1.3757 and then moved down a bit and close at 1.3750. You can see on the chart below that the move so far has been overlapping and unconvincing as an impulsive move. However, the Euro both technically and fundamentally has been due for a drop. Especially, since the Pound has started its descent down two days earlier in impulsive moves. So far its move down from 1.6467 appears to be in a third of a third at 1.6305. The Aussie and Kiwi moved up in corrective threes earlier this week and lost Thursday and Friday against the buck. The NZD/USD performed better giving back only 38.2% of its correction so far leaving it consolidating on Fridays close while the AUD/USD gave back all of its weekly corrective gains and some to close in a fifth wave of three at .8951. The USD/CAD fared the best coming off of its Dec 4th 1.0707 high to close Friday at the 1.0631. Lately, the Swiss Franc has been tracing out the Dollar index’s price action and appears to have hit a bottom at .8840. However the move up has so far been a bit corrective-like with the pair closing about even for the week at .8894. The move up from the Dec 11th bottom could be a leading diagonal, however its wave one is shorter then wave three leaving me waiting for the pair to reveal more price action before I put an count on it. A break above .8918 will confirm the bullish bias. The Yen moved up most of the week and gave some back on Friday closing at 103.27. USD/JPY is wasting no time in reaching for the 105 minor wave 5 target, which it should get to by Christmas. However the move up from the 102 Dec 11th low has retraced into the December 9th high leaving me with the feeling that the pair could be extending past the 105. This coming week’s price action will tell a lot.

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The US 10 Year Yield hit a high of 2.88 on early morning trading Friday and finished off at 2.86 at the close. So far the Yield’s move up from the Oct 23 corrective low can be counted impulsively, however it could be a three B wave which would make the move down from the September 5th high a Flat formation. However, if the US Dollar has put in a bottom, Yields should head up past the 3.0 in an impulsive 5 before correcting back down in a two wave at minute degree. There is an alternate count that has the Yield in a three at minute now, which is more consistent with a stronger dollar move. However, the price action and Fibonacci levels for the corrective move from the Sept 9th 2.97 high are more consistent with wave four structures then two wave structures. Regardless of which scenario you take, the price action for both counts is for more upward movement in the next couple of weeks at minimum.

So far the moves up for Gold and Silver from their Dec 4th lows have been in threes. Gold hit a low of 1211, moved up 1268 on Wednesday the 10th and closed at 1238 on Friday’s close. Silver hit a low at 18.88 before it moved up correctively to 20.52 and moved down to 19.73 to finish off the week. Both are still in corrective territory, although technically very weak and should move down to lower levels starting early next week.

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