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Thursday, December 2, 2010

Thursday 12/2/10 wrap up

Looks like we did in fact have a triangle Intermediate W4 which bottomed Monday.  That puts us in the 5th wave of the rally that started in July. 

The question now is how far and how long will it trend?  The most obvious target is the Nov 9 top @ ES 1224.75 which is only inches away as I write this.  That could well be it, classic Elliott theory calls for a short quick burst to the prior high when coming out of a triangle with a target around the preceding high.  So this certainly fits.  From a fibonnaci standpoint, Intermediate W1 traveled 125 points, so starting from the W4 triangle low @ ES 1171 a .500 of W1 lands @ 1233.50, .618 is 1248.25, and equality is at 1296.00 (we've already surpassed the .382 level @ 1218.75). 

In the currencies, there looks to have been a MAJOR player in the market today, my guess is the central banks are coordinating to suppress the dollar to try to alleviate the EUR situation.  Following charts are 15 minute bars of the EUR and AUD, I suspect you'll see the same pattern in other currencies that I don't follow.

I'd say this almost certainly is what central bank intervention looks like.  At the risk of sounding cocky, I don't believe they can make a lasting difference in the currency markets, those are truly mammoth flows.  So my finger is on the sell trigger in both the AUD and EUR - if they have to work this hard to push them the little bit that they did I believe the downside could be pretty powerful.
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