Markets Fragmenting at Turning Point?

The S&P and Dow fell off in five waves today to complete first of third waves off of their Nov 29th highs. The S&P cut through the Dec 4th 1796 support invalidating the impulsive count up from the Dec 4th low. The Index hit a low today Wednesday 1780 just shy of the wave one low at 1779. From there it should move up to about the 1791 tomorrow in a second wave of three before falling again and breaking the end of wave one in a third of third. Likewise the Dow appears to have ended a wave one of three, which has also invalidated the bullish count by breaking through the 15924 wave one alternate impulsive count up. The index is now sitting just shy off its low at 1584 but shy of breaking the wave one bottom. It too should carve out a wave two before heading down in wave three of three. Transportation has also carved out a wave one of three only it has taken out its wave one bottom at 7084. The index so far has been true to Elliott Wave form from its Dec 2nd high. The move down is in a nice five waves with a deep retracement to the 78.6. From there, the index fell off in textbook third wave fashion with very short retracements for a nice wave one of three. The NAS is lagging a bit having only cut out a wave one at submicro degree from its Dec 9th 4081 high. However, the move down so far is a clear five waves and has also broken through the Dec 4th 4004 previous 4th wave support at subminuette degree. The index should retrace somewhere between the 4040 50% and the 4064 78.6% in wave two.

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The Dollar index appears to have finished off a zigzag yesterday with a low at 79.74. The C move down is measured of off the 80.82 E wave of a triangle B wave. Today the Buck has moved up to the 79.95. With an early taper supported by the good US fundamentals, you would think the buck should have already been rallying; yet, so far it is lagging the expectations. Some attribute the moves as risk on, however, even this has been off with the pound weak against the buck and the Euro while the Commodity bloc performed better last week and earlier this week. Today however, the Kiwi and the Aussie both gave up some ground to the buck with the Aussie losing the most. The NZD rallied a bit on the back of some hawkish comments from the New Zealand Central Bank. However, the pair failed to take out the Dec 10 top retracing 61.8 of the move so far tonight. The pound, which is usually a risk on currency, has been losing to the Buck since its Dec 9th high. GBP/USD looks like it is in a bearish fifth wave now at 1.6363. It should make one more push down past the 1.6338 before retracing a wave two. Today the Euro hit a high at 1.3811 and moved down in two waves to the 1.3772 and is now at 1.3772 9pm EST. The Euro has been surprising most analyst as of yet completely outperforming its fundamentals. However, it has been pretty common for the Pound to lead the Euro on major turns the past couple of years and it could very well be doing the same this time. The USD/JPY has completed a third of a third and is in a fourth wave now. This fourth wave could be counted as complete however there is room down to the 101.60 previous fourth wave of lesser degree. From this fourth, the pair should push up to the 105 in a final fifth wave to complete the five wave move up at minor degree. A thrust out of a triangle is an ending move and the Yen should strengthen against the buck considerably and the crosses if so.

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The 10 year came off of its Dec 6th 2.88 high to hit a low today at 2.79 before closing at 2.84 today Wednesday. The Yield tested but failed to break the 2.79 handle and could move up past the 2.97 wave three top it put in Sept 5th. If so, it would be a very bad sign with equities falling while interest rates rise. If Yields fall from here, it would carve out a C wave 4 of a larger zigzag down off the Sept 5th high.

Both Gold and Silver have retraced of off the Dec 4th lows and have hit minimum targets. Gold moved up 56 bucks and hit 1268 before pulling back to 1254. The move down off yesterday’s high so far is choppy and unconvincing as an impulse. Silver hit its corrective high today at 20.50 and has inched down to the 20.30 this Wednesday night. It too has completed three wave moves and has met minimum targets. However, take note that both of the metals have room up and that the corrections so far are shallow—both only retracing 38.2% of their late October impulsive moves down.

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