Equities Up, Utilities Tanking, Dollar Splintered

Once again US equities made new highs this week and can either be finished fifth wave targets or due for one more push to finish off these fifth waves. Equities are due now for fourth wave retracements before heading up for one more push to complete B wave structures at primary degree. The S&P barely made out a new high on Tuesday the 26th at 1808. This high can be counted as a finished minuscule green 5th to complete the larger fractal third wave impulse at minuette degree. Likewise, the Dow is cutting out the same type structure to finish its fifth wave at Subminuette degree. It too, could be counted as finished. However, the moves on the S&P and the Dow from their Nov 25th third wave highs have been pretty choppy and behaving very much like the fourth waves. Although a bit tougher to count, the NAS appears to also be finishing off a fifth wave at micro degree. Transportation appears to be carving out an ending diagonal at subminuette, if it too is to turn down now in a good fourth wave retracement at minute degree. Take note that Utilities has not been participating in these new highs of late. The index has actually been heading down in what looks like a third of 1 of minute 3 (see chart below). If the index breaks the 476 support, it would strengthen the count as is significantly. Wave structures are at their limits on the major indexes and could very well turn down now; however, I do not t think it likely. What I am sure of is that they are past due for a good size retracement at minute degree. From there they should head up for one more push and probably tank.

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The buck has been splintering lately coming in strong against the Yen and the Commodity bloc; however, losing ground to both the Pound and the Euro with the pound breaking some key triangle trend line resistance at 1.5329. However, this throw over move is not atypical of E wave behavior. A move above 1.6746 will be very significant in the Pound’s role to come if accomplished. The move would invalidate the long standing Triangle at Minor degree. The Euro on the other hand has some room to correct up to the 1.3694 where it will hit some very strong Fibonacci convergence at zigzag equality. The EUR hit a high this week at 1.3618 before pulling back to 1.3559. The CAD gave up some more ground this week with the buck breaking up 3 pips above the 1.60 before giving some back. It is now resting at 1.0589 Wednesday night Asian session. The USD/CAD is up against some very strong resistance. If It breaks and closes above 1.0610 the next hurdle will be the 1.0658. If it does make it past these then the dollar could be signaling a new trend. The Dollar index hit a low of 80.48 just past the 38.2% retracement of the move up from the Oct 24 79.00 bottom. The move down From the Nov 8th 81.48 top could be a zigzag that can be counted as complete just shy of equality. The move up so far looks impulsive on the 15 minute which appears to be now correcting wave two. A break above the 80.79 will confirm the move while a breakdown below the 80.61 will force an invalidation of the count at submicro.

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The Ten year seems to have carved out a running flat and could be heading up past the 3.0 taking the buck with it. A break below the 2.69 will keep it in its second wave retracement. Running Flats are not common for wave twos yet they do happen when the trend up is strong. The yield moved up from the C wave move at 2.69 to top at 2.77 before settling down in what looks like a wave two at 2.74 so far at micro degree.

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Gold dropped to 1226 early this week and moved up to 1259 before pulling back today. It is now sitting this Wednesday night at 1239. Silver hit a low at 19.60 on Monday and moved up to 20.32 before giving up most of it and is now sitting at 19.68 just shy of a new low. If the metals make new lows, they will be extending third waves. However, like I said last in last week’s wrap up, both the metals are due for a good correction. Sentiment on gold and silver are at very low levels and the wave structure on both are calling for a move up of at least 80 bucks.

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