Stocks and USD Stall After Payrolls

The S&P has moved up in an impulsive wave sequence from its Feb 5th 1737 low. At 1878, price is sitting just under the Subminuette 5 vs. 1 100% equality target. From a Micro decomposition, the index seems to be extending past the 100% equality up to the 161.8% to finalize Subminuette 5th wave at 1988. And even though the Dow is yet to make a new high above the Dec 31st mark, its move up from the Feb 5th low completed an impulsive structure at the Feb 28th 16397 high. As in the S&P, the subsequent corrective move down to the March 3rd low is very shallow for a wave two corrective at 23.6% of wave 1. If the indexes break down from current levels, then expanded flat structures could take the indices at least to the 38.2% retracement of the moves up from the Feb 5th lows.

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Transportation broke to a new high at 7629 early Friday morning and pulled back to close at 7592. The move up from the Feb 5th low is impulsive and so far the index looks like it is finalizing a 3rd of a 3rd. Proportionately, the averages should complete its minute 5th of Minor C at 7845—the 127.2% 5 vs. 1. The NASDAQ Tested its Thursday’s high on Friday at 4371 and pulled back to close the session at 4348. The index needs to finish filling in a gap to the 4285. From there the Average looks strong technically. However, keep in mind that at current levels stocks could still be carving out a deeper 2nd wave corrections. This is the only thing structurally that I do not like about be too overly confident about being bullish. The apparent waves twos on the indices are way too short. Wave twos usually retrace at the very least 38.2% and usually 50 to 61.8% of wave one, which they haven’t as of yet.

The US Dollar index closed at 79.69 on Non Farms Friday in a bullish reversal Spinning Top candlestick to complete a triple complex corrective pattern for a Micro degree wave 2. The index should move up in a wave three to 83.84. Take note however that the buck now looks weak against the Euro and with the current high it took out on Friday, the pair is now poised to finish off a zigzag sequence from the Nov 7th 1.3104 low near the 1.4075. From there the Euro should break down in five waves of a Minuette C wave.

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The CBOE 10 Yr. Treasury Yld Index spiked up to 2.80 Friday and pulled back to close a basis point of the monthly high. The move from the Feb 3rd 2.57 low looks like a flat sequence which could push up to the 2.85 before heading down to about the 2.35 before moving up in a third wave a minor degree. Counting the Index from the Jan 2nd 3.03 top as a complete five wave sequence, the subsequent move down should be a zigzag pattern which is now about to complete its B wave. Keep in mind that there is an alternate count that has the index completing its five wave sequence for a wave one at minor degree at the Aug 22nd 2.92 high and its wave two retracement at the Oct 23rd 2.46 low. This would make the move up from the wave two low as a complete 1-2 sequence putting the 10 Yr. in a wave three of three. This count would mean that the two swings up from the Feb 2nd low are a 1-2-1-2 sequence. I am starting to like this count better now that the Dollar Index has retraced in corrective fashion the impulsive wave up from the Oct 25th 2013 low by more than 78.6%. If the Buck takes off from current levels in its wave three, then the current 1-2-1-2 sequence in the 10 Yr. could be a telling sign of US dollar strength to come.

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Gold and silver are currently finishing off third of thirds. The metals should push up a couple of more times to complete 5 wave moves of C waves. Gold needs to push up to the 1378 area to complete a running flat pattern that started back at the June 28th low. The yellow medal is coming up against some strong trend line confluence made up of the minor degree upper channel trend line and the long term underside of the bullish Primary degree channel trend line dating back from the April 2001 low. Silver is now just about finished a wave 4 at Subminuette degree and should complete wave five near the 22.72 before breaking down in a Minor fifth wave.

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