Equities Fall, Yields Spike and The Buck Gains on Hawk-like Minutes

The S&P, NAS, Trans, and Utilities were down for the third day in a row and two days for the Dow on Wednesday’s close. The S&P so far has carved out a three wave zigzag from its Nov 18th 1802 top on the 15 minute chart. If it is a C wave that has finished then submicro wave five should already be on its way up to finish off micro wave five. However, bear in mind that the micro wave five could be finished now and heading down for a deeper retracement to the 1746 previous forth wave at micro degree. Also consider that all the indexes are extending waves and sentiment indicators are at reversal levels now making a turn south now likely. One this possible alternative count, the Dow looks like it could be completing fifth wave at minor degree for an intermediate degree wave C of primary wave B.

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After completing a flat at 8053 which is the 38.2% retracement of the move up to the Nov 7th top at 8146, the USDollar index rallied nicely and even gapped up to hit 8116 after the release of the minutes. However, the dollar had been well bid all morning before the release. It should correct and fill the gap now during the Asian markets and then start rallying again during the European markets. The buck was strong against all the majors and particularly against the Euro today Wednesday. It had some problems moving up against the Yen but finally did later in the Day during the US session. After this move retraces the buck will be in a third wave which could carry it past the 82 handle. Once this impulse is finished it will only be the first of a third wave march at minuette degree.

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The ten year wasted no time moving up from the 2.69 short zigzag that completed a basis point away from the 38.2 % retracement of the move up from Oct 30th 2.47 low. The Yield broke the 2.78 high off of the Oct 3rd minute fourth wave retracement. If this doesn’t turn into an expanded flat, yields will be in a third wave of five at minute degree. If so, then the yield could get as high at 3.20 to 2.25 before it retraces significantly again.

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Both gold and silver broke the Oct 15 lows confirming immediate bearish counts. Gold fell to 1242 tonight and silver 19.79. Gold has completed five waves on the hourly charts and now seem to be in a third wave at minute degree. A break blow 1206 which is the 88.7% retracement from the move up from the June 28th low, will confirm the bigger move down now in the metal. So far the move on both the metals look very strong and the structures on the smaller fractals look very impulsive. Given the action in the other asset classes and the low CPIs, the metals look very weak.

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The moves today were all attributed to the hawkish Fed’s minutes and better than expected fundamentals out of the US. How the Fed can keep to their hawkish stance while yields are rising is impossible. Housing is having a trouble handling these low rates as it is. I wonder how the markets will react when the Fed has to turn dove again. It just might become apparent that the Fed and the rest of the world are stuck in QE.

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