Weekly Elliott Wave Analysis Feb 22nd 15: Yellen New Patience Sends VIX to 1427

The S&P 500 hit the 2111, a new all-time high, once again this week while the Buck traded mostly sideways contracting into a triangle which looks about done. Crude oil failed to make it over the 54.25 upper range of the sideways action is has been is since the 54.25 high. The US 10 year yield, held up refusing to drop below the 2.04 and still flirting with breaking above the Oct 30/Aug 15 low trend line. Gold and silver sold off on the week with silver dropping to the 16.20 and gold to about the 1200. It looks like the market took Yellen’s “patience” as things are still good but the can might be kicked down the road a little more if needed. Hence the stock market to new highs. Again Macro number came out mixed to bad with housing looking weak out of the US, Germany’s ZEW Survey Economic Sentiment missed along with Japanese GDP QoQ.


The SPX 500 broke out of the upper channel possibly leaving behind a triangle green 4th wave. After the break the index moved back down tested the trend line now acting as support and move up in what appears to be rather weak impulsive wave. There are many ways to count this extra-long counter corrective B wave the index is in. My two favorite have the index in final 5th waves. The one hear has the index wrapping up a triangle for a wave 4 at the 1979 low. At smaller degree, blue wave 4 is done at the 2085. Blue wave 5 could be either done now or push up to about the 2145 before the index rolls over once again. The other count has the index in an ending diagonal series in which the index is in a 3rd wave now–if this were the count.


I’d like to point out that Crude actually sold off after the Fed talk of patience while the stock market went to new highs. It would have been very bullish indeed if Crude broke above the 54.25 high when stocks hit their new all-time highs. However, even though the commodity is taking too long for my comfort, I am still holding to my immediate bearish series of 1-2s down. As expected, price dropped down from he 54.10 in what looks like a 1-2 so far. Price needs roll over soon. Blue wave 3 is expected to complete near the 44.26.


Meanwhile the Buck still looks strong on both the DX-X and the FXCM USDollar. On both chart the Buck has been able to stay above previous support zone which must be breached in order for the larger corrective pattern we have been anticipating to form. The DX-X so far looks like it is carving out a bullish triangle pattern that just might be done now. If so the index should move to new highs soon. Bear in mind that the move down from the 95.11 high could extend down past the 93.26 in a zigzag for a double zigzag down from the 95.52 high. However the longer the index takes to move down the lesser the chance it is. It looks like the 93.26 is refusing the give in to the Greenback. It should have sold off on the back of Janet’s dovish talk but it didn’t. In the end the Greenback was pretty much flat after the Fed’s patience statement—a testament to its deflationary type strength.


Yields have been helping to the appetite for dollars. The CBOE US 10 Year Yield is still holding on to its impulse wave up to the 2.14 high from the 1.65 possible Green wave 2 low. The index is now near the upper Oct 30/Aug 15 low trend line now acting as resistance. The index needs to get up above the trend line for the bullish count to hold. The Yield could pull back to about the 1.84 61.8% Magenta 2vs.1. The benchmark could move up now above the line—for a very bullish move; however, I feel this unlikely and think rates are going to pull back this week to said levels before it heads up above the Black trend Resistance in a 3rd wave advance to about the 2.50.


Gold sold off after Weds after Yellen’s comments but quickly gained the losses back and actually closed positive for the day at 1212. However, both metals rolled over Thursday and Friday with gold hitting a low at the 1196 testing the Nov 7th/ Jan 1st trend line. I feel this trend line should hold price leaving the metal poised for a move up too about the 1240 for a counter corrective Blue B. A move down below the 1196 low and the index could head down to the 1166 low. However, I feel this unlikely and expect the yellow metal to move up soon to the 1240.s before price heads down to the 1131 once again.

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