Friday Ends Another Bad Macro Week–Stocks, Oil and Gold sold for the Buck and Bonds

Monday ISM Manufacturing PMI (July) and ISM Prices Paid missed big and fell from last month’s print. Construction Spending also missed coming in at .1 vs. the .6 expected. That was just the start. Wednesday’s macro numbers were also bad. ADP Employment change (July) printed 185K jobs created vs. the 215k expected. Trade Balance also missed and widened coming in at -43.84B vs. -42.70 consensuses. Friday’s labor numbers were mixed to bad. The nonfarm Payroll came in at 215k vs. the 223 expected while Average Weekly Hours beat the expected 34.5 printing 34.6. Average Hourly Earnings also ticked up .1 to 2.1% YoY. Fear dominated the markets for in the end, Bonds and the Buck made weekly gains while Oil and Stocks were dumped. Gold and silver traded sideways with gold finishing the week slightly down and silver slightly up.

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Both the metals look to be completing bearish corrective structures—gold is nearing the apex of a triangle while silver looks to have competed a flat for its corrective. Both metals should break down soon to possible bottoms of their five wave multi-year declines from the 2011 all-time high. My target for Gold is at the 1040—the March 2010 bottom. From there, the counter corrective move should reach no further than the 1500.

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From the weekly the SPX 500 has cut out a complete bullish triangle from the 2119 Feb 2015 high to the 2063 warning of a possible move to a new all-time high. Normally, I would go with the bullish move if it were not for the bearish technical patterns across major indexes. The Dow Jones Composite has broken down through a head and shoulders neckline and counts a complete leading diagonal series at the 6084 June low. The index is wrapping up its corrective now. Transportation has pulled up in three complete waves now after completing a 3rd wave. A fifth wave is now expected to take the index down below the 7970 July 5th low. Even though the Dow Utilities Index was up for the week, its subsequent bullish move is now at a corrective end. I favor the 1-2 series count down from the 657 Jan high on the Utilities index. Over in Asia, the Shanghai Composite Index, after retracing just 44% of the dramatic drop from the 5147 June high has rolled over once again. Friday’s closing pattern looks like a triangle which should yield further losses. The Nikkei was up this week, although, failed to take out the 207020 July high. This index looks the most bullish of the majors. However, the two failed attempts at trying to takeout the June 23rd 20838 high, leaves the index looking bearish coming into this week. Both the DAX and the FTSE look to be in C waves of corrective moves up from their respective lows. Once complete they should roll over once again. Global indexes could theoretically make it to new all-time highs for most are near them now; however, the structures all count better bearish. Moreover, both the current global, macro picture and technical, intermarket trend is warning of danger.

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Crude lost a staggering 6.5% this week and has bled red 8 consecutive weeks now. Price, however, is at the five-wave series end from the 61.82 June high. The commodity is now expected to correct in a 4vs.1 or in a 2vs1. Favoring the 4th wave contraction, I have pulled up my Green 5th wave target to the 40. Confirming this view is gold’s possible nearing of its Intermediate degree A bottom. It looks like both gold and oil could be nearing an end to their bearish five wave moves from their respective highs. Right now, the buck is not trending with rates. Bond market strength and Oil weakness could be propping stocks. Once Commodities bottom and tick up, it could push stocks over the edge. Rates should start to move up then also for they usually trend with commodities. The Buck should drop if it follows its intermarket script. But like I have said, lately it has not been. If the buck keeps up this deflationary divergence, it could point for trouble for the bond markets all over the world.

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The Dollar Index was green for the week; however, after the 98.33 spike up, the index gave it all back closing below the price it traded before the non-farms miss. Price moved up as expected and tagged the 100% Blue Cvs.A but then the index fell off impulsively and closed at 97.56 leaving a possible Green B wave at the 98.33. Three down is now expected to take the Buck down to the 93.82. Both rates and oil need a break from their respective drops. This should favor the Buck dropping in C.

On the callendar next week we haveUS retail sales and industrial production. Q2 GDP figures across Europe are in the spot light too.

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