Buy signal on Silver hourly Trend/Osc
Wednesday, November 17, 2010
Tuesday, November 16, 2010
Tuesday 11/16/10 update
5:00 PM CST
POSSIBLE ELLIOTT COUNTS
ES
Alternate #1
Alternate #2
EUR/US$
GOLD
2:10 PM CST
A little food for thought - Intermediate Alternate #2 on the ES from my weekend post:
9:20 AM CST
ES has been awfully difficult to read as of late. Yesterday's Trend/Osc buy signal was canceled with the overnight lows, I had a hunch that would happen which is why I was ambivalent about acting on that signal yesterday.
The Elliott count looks like a zig-zag down from last week's highs with the C wave being an ending diagonal and quite possibly done as of the lows this morning.
POSSIBLE ELLIOTT COUNTS
ES
Alternate #1
Alternate #2
EUR/US$
GOLD
2:10 PM CST
A little food for thought - Intermediate Alternate #2 on the ES from my weekend post:
9:20 AM CST
ES has been awfully difficult to read as of late. Yesterday's Trend/Osc buy signal was canceled with the overnight lows, I had a hunch that would happen which is why I was ambivalent about acting on that signal yesterday.
The Elliott count looks like a zig-zag down from last week's highs with the C wave being an ending diagonal and quite possibly done as of the lows this morning.
Monday, November 15, 2010
Monday 11/15/10 update
Got a buy signal on hourly Trend/Osc on ES at the top of the hour. I'm ambivalent about this signal, the Elliott count here is difficult and we're overbought on a very short term basis (5 minute charts).
Saturday, November 13, 2010
Weekend Update 11/13/10
Smells like a paradigm shift is in the works. For some months now the drivers of the markets followed on this site have been the mid-term Congressional elections, a weak US$, low interest rates, and a strengthening but still anemic economy. A strengthening but anemic economy still appears to be the case, but the other factors are in flux. Obviously the mid-term elections are history so that driving force is gone. The two key factors IMO are the US$ and interest rates, which are closely related.
On interest rates, long rates (30 yr US Treasuries) appear to have bottomed. Shorter rates are still low, and the Fed is busy trying to keep them suppressed with the QE2 liquidity injection plan. One has to question how effective QE2 will really be, the more liquidity in the economy the greater the inflation risk. A perception of inflation risk will lead to a demand for higher risk premiums, i.e. interest rates, on debt instruments. In addition, this last week an auction of 30 yr US Treasuries did not get good demand, so we may also be seeing the start of hitting the bottom of the barrel in available funding for US debt. That's ominous. All of this combined spells the definite possibility of much higher interest rates across the board for US$ denominated debt instruments.
Higher interest rates will lead to strength in the US$. And, in point of fact, the DX (US$ futures) appears to have bottomed, at least for the time being. A chart of the DX shows a clear a-b-c move down since highs in early June. In turn, the "C" wave of this move shows 5 waves complete at its early November lows.
The thing to watch on this daily chart is the upper channel trendline. A daily close above that trendline would confirm a change to bullish in intermediate term trend for the US$. At Friday's close that trendline was at 79.09 and declining at the rate of roughly .09 per day.
EUR/US$
The EUR is showing the flip side of US$ strength. It topped on Nov 4 and has been in a steady decline since. In addition to US$ strength the EUR is being further weakened by economic concerns in the EC block countries of Ireland, Spain, Italy and of course Greece.
From a technical standpoint the EUR generated a sell on the hourly Trend/Osc on Nov 5 and on the daily on Nov 9, so it is in a confirmed downtrend.
EUR Hourly Trend/Osc
EUR Daily Trend/Osc
From a short term trading standpoint, the EUR quite possibly put in a short term low on Friday and is in the process of a bounce. This bounce is a good candidate for establishing a short position. However, the Elliott count since the top is a bit awkward, so the initial wave (which would be Minor W1) may not, in fact, be complete.
ES
From a long term perspective I believe we're in an Elliott "X" wave separating a years long corrective sequence. That X wave started at the Mar '09 lows and completed the "A" leg at this year's April highs. The question right now is whether the "B" leg of that move was done at the early July lows or is still in progress. Thus I have two intermediate term alternates at the moment.
Alternate 1
Alternate 2
Alternate 1 has Primary Wave B of Cycle X complete at the July lows. In the rally since then we have Intermediate Waves 1, 2 and finally 3 (purple) complete at Tuesday's highs. That would leave an Intermediate W4 and W5 yet to go to finish Major W1 of the Primary "C" leg of the Cycle X wave.
Alternate 2 has Primary B still in progress with it forming a 3 wave flat type of structure. In that context, the early July low marked the end of Major Wave A, and Major B finished at last Tuesday's highs. We thus would be in the initial stages of what should be a sharp and deep sell off down to the July lows at a very minimum.
Alternate 2 would make all the perma-bears happy, but I believe it is the less likely of the two. Alternate 1 fits much better with historical seasonal patterns, which are generally bullish at the end of the year, especially from mid-December through early January. In addition, the very short term price pattern following Tuesday's highs has been very choppy and overlapping, more befitting the start of a sideways Wave 4 type correction than the start of a strongly impulsive 5 wave down move that would be expected in Alternate 2. In Alternate 1, the Intermediate W2 selloff in August was a zig-zag, so the projected current Intermediate W4 should be either a flat or triangle to meet the Elliott rule of alternation. Flats and triangles are more sideways patterns than sharp sell offs, once again that fits with what's been seen so far since last Tuesday.
Finally, there is a 3rd ES alternate that I've not charted, and that is that the rally sequence from the late August lows was NOT complete at last Tuesday's highs and itself needs a W4 and W5. This is a viable alternative but not as likely as the other two already presented IMHO. Time will tell.
The very short term Elliott count since Tuesday is very murky due to it's choppy and overlapping pattern. It can be labeled such that there is a 3 wave move done at Friday's lows which would complete an "a" wave of Intermediate W4. But that labeling is not high confidence, there could easily be more selling left to complete this move. However, next week is OPX which has been historically bullish.
GOLD
Recently a case for gold tracing out a large Minute W4 flat correction was presented on this site. It looked like that possibility went out the window with the rally into Tuesday's highs which carried prices past a ratio of 1.382 times the maximum travel of the "a" leg of that possible flat. However, Tuesday's highs at 1424.30 was only 10 cents shy of an exact 1.5 times the "a" leg, and the selling since then has been very sharp and impulsive as would befit the "c" leg of a flat. So at this point the flat Minute W4 correction idea is not only very much alive but apparently in progress and in it's last stages. Since last Tuesday's highs it looks like Waves 1,2 & 3 are done with Gold now in W4 of that "c" leg. This fits with the idea of the EUR currently in a retrace to it's confirmed downtrend.
The longer term implications here fit with the themes presented earlier in this post. Near term, strength in the dollar would have a negative impact on the price of gold. But if inflation expectations really start intensifying one would expect the price of gold to climb long term. Gold trades like a commodity, and in commodity markets the 5th wave of a move is generally the longest and most powerful rather than the 3rd wave as in equities. If the above count is correct, we will be entering a Minute Wave 5 fairly soon, and that Minute W5 only completes minor W3 of Intermediate W3 of Major W3 of Primary Wave V. So there's a long way to go for gold if this count is correct. Which by the way would indicate some severe inflation on the horizon.
Thanks Ben.
On interest rates, long rates (30 yr US Treasuries) appear to have bottomed. Shorter rates are still low, and the Fed is busy trying to keep them suppressed with the QE2 liquidity injection plan. One has to question how effective QE2 will really be, the more liquidity in the economy the greater the inflation risk. A perception of inflation risk will lead to a demand for higher risk premiums, i.e. interest rates, on debt instruments. In addition, this last week an auction of 30 yr US Treasuries did not get good demand, so we may also be seeing the start of hitting the bottom of the barrel in available funding for US debt. That's ominous. All of this combined spells the definite possibility of much higher interest rates across the board for US$ denominated debt instruments.
Higher interest rates will lead to strength in the US$. And, in point of fact, the DX (US$ futures) appears to have bottomed, at least for the time being. A chart of the DX shows a clear a-b-c move down since highs in early June. In turn, the "C" wave of this move shows 5 waves complete at its early November lows.
EUR/US$
The EUR is showing the flip side of US$ strength. It topped on Nov 4 and has been in a steady decline since. In addition to US$ strength the EUR is being further weakened by economic concerns in the EC block countries of Ireland, Spain, Italy and of course Greece.
From a technical standpoint the EUR generated a sell on the hourly Trend/Osc on Nov 5 and on the daily on Nov 9, so it is in a confirmed downtrend.
EUR Hourly Trend/Osc
EUR Daily Trend/Osc
From a short term trading standpoint, the EUR quite possibly put in a short term low on Friday and is in the process of a bounce. This bounce is a good candidate for establishing a short position. However, the Elliott count since the top is a bit awkward, so the initial wave (which would be Minor W1) may not, in fact, be complete.
ES
From a long term perspective I believe we're in an Elliott "X" wave separating a years long corrective sequence. That X wave started at the Mar '09 lows and completed the "A" leg at this year's April highs. The question right now is whether the "B" leg of that move was done at the early July lows or is still in progress. Thus I have two intermediate term alternates at the moment.
Alternate 1
Alternate 2
Alternate 1 has Primary Wave B of Cycle X complete at the July lows. In the rally since then we have Intermediate Waves 1, 2 and finally 3 (purple) complete at Tuesday's highs. That would leave an Intermediate W4 and W5 yet to go to finish Major W1 of the Primary "C" leg of the Cycle X wave.
Alternate 2 has Primary B still in progress with it forming a 3 wave flat type of structure. In that context, the early July low marked the end of Major Wave A, and Major B finished at last Tuesday's highs. We thus would be in the initial stages of what should be a sharp and deep sell off down to the July lows at a very minimum.
Alternate 2 would make all the perma-bears happy, but I believe it is the less likely of the two. Alternate 1 fits much better with historical seasonal patterns, which are generally bullish at the end of the year, especially from mid-December through early January. In addition, the very short term price pattern following Tuesday's highs has been very choppy and overlapping, more befitting the start of a sideways Wave 4 type correction than the start of a strongly impulsive 5 wave down move that would be expected in Alternate 2. In Alternate 1, the Intermediate W2 selloff in August was a zig-zag, so the projected current Intermediate W4 should be either a flat or triangle to meet the Elliott rule of alternation. Flats and triangles are more sideways patterns than sharp sell offs, once again that fits with what's been seen so far since last Tuesday.
Finally, there is a 3rd ES alternate that I've not charted, and that is that the rally sequence from the late August lows was NOT complete at last Tuesday's highs and itself needs a W4 and W5. This is a viable alternative but not as likely as the other two already presented IMHO. Time will tell.
The very short term Elliott count since Tuesday is very murky due to it's choppy and overlapping pattern. It can be labeled such that there is a 3 wave move done at Friday's lows which would complete an "a" wave of Intermediate W4. But that labeling is not high confidence, there could easily be more selling left to complete this move. However, next week is OPX which has been historically bullish.
GOLD
Recently a case for gold tracing out a large Minute W4 flat correction was presented on this site. It looked like that possibility went out the window with the rally into Tuesday's highs which carried prices past a ratio of 1.382 times the maximum travel of the "a" leg of that possible flat. However, Tuesday's highs at 1424.30 was only 10 cents shy of an exact 1.5 times the "a" leg, and the selling since then has been very sharp and impulsive as would befit the "c" leg of a flat. So at this point the flat Minute W4 correction idea is not only very much alive but apparently in progress and in it's last stages. Since last Tuesday's highs it looks like Waves 1,2 & 3 are done with Gold now in W4 of that "c" leg. This fits with the idea of the EUR currently in a retrace to it's confirmed downtrend.
The longer term implications here fit with the themes presented earlier in this post. Near term, strength in the dollar would have a negative impact on the price of gold. But if inflation expectations really start intensifying one would expect the price of gold to climb long term. Gold trades like a commodity, and in commodity markets the 5th wave of a move is generally the longest and most powerful rather than the 3rd wave as in equities. If the above count is correct, we will be entering a Minute Wave 5 fairly soon, and that Minute W5 only completes minor W3 of Intermediate W3 of Major W3 of Primary Wave V. So there's a long way to go for gold if this count is correct. Which by the way would indicate some severe inflation on the horizon.
Thanks Ben.
Thursday, November 11, 2010
Thursday 11/11/10 update
9:00 AM
Yesterday's buy signal on the hourly AUD is canceled with the low print in the last hour.
8:50 AM CST
Put on a long AUD position yesterday PM @ 1.0022, stop loss @ .9953. Yesterday evening the AUD spiked up and then down in a very short space of time, don't know what drove that gyration but I do know that the spike down went EXACTLY to my stop @ .9953 and took me out. Looks like a stop sweep to me, if so it's pretty dirty. Generally I thoroughly enjoy trading, but there are times.................
Yesterday's buy signal on the hourly AUD is canceled with the low print in the last hour.
8:50 AM CST
Put on a long AUD position yesterday PM @ 1.0022, stop loss @ .9953. Yesterday evening the AUD spiked up and then down in a very short space of time, don't know what drove that gyration but I do know that the spike down went EXACTLY to my stop @ .9953 and took me out. Looks like a stop sweep to me, if so it's pretty dirty. Generally I thoroughly enjoy trading, but there are times.................
Wednesday, November 10, 2010
Wednesday 11/10/10 update
4:50 PM
Sell signal on daily EUR Trend/Osc at the close today. Prices dipped below the daily uptrend line on Monday, and the Dynamic Oscillator dropped below 80 at today's close, but just barely (79.6). If this sticks, it doesn't bode well for the long AUD put on earlier this PM, glad I only put on a 1/2 position.
2:05 PM CST
Buy signal on AUD hourly Trend/Osc. AUD has been pretty strong, so went long on this buy signal but picture is a little dicey here, so only went 1/2 position.
Sell signal on daily EUR Trend/Osc at the close today. Prices dipped below the daily uptrend line on Monday, and the Dynamic Oscillator dropped below 80 at today's close, but just barely (79.6). If this sticks, it doesn't bode well for the long AUD put on earlier this PM, glad I only put on a 1/2 position.
2:05 PM CST
Buy signal on AUD hourly Trend/Osc. AUD has been pretty strong, so went long on this buy signal but picture is a little dicey here, so only went 1/2 position.
Tuesday, November 9, 2010
Tuesday 11/09/10 wrap up
ES
Minute W5 (green) and thus Minor W5 (red) of the rally from late August was quite possibly complete at today's highs. The strength of the selloff today certainly would seem to corroborate that.
Preferred Count
However, it is possible that the selling today is a "c" wave to Minute W4, with Minor W5 in the wings. If so, the market needs to rally almost immediately. Minute W1 topped @ ES 1196.50, so an ES print below that level invalidates this possibility. The ES bottomed today at 1206.25, so 1196.50 is not very far away. This alternate has a much lower probability IMO.
Alternate count
The daily Trend/Osc has the ES still in UP mode, if that swings to DOWN mode the top is confirmed. The question in that eventuality is what severity the correction will have.
AUD/US$
Sell signal on the hourly AUD Trend/Osc today. Prices broke below the uptrend line at 11 AM CST and then below 80 on the Dynamic Oscillator at 12 PM.
Daily AUD Trend/Osc is in solid UP mode, so at this point I'm inclined to ignore the hourly sell (except for selling long AUD which was done at mid-day today) and plan to go long on an hourly Trend/Osc buy signal.
EUR/US$
The EUR is turning into a train wreck (BTW this is one reason to believe the top is in on ES). Overnight a clear 5 waves down from last Thursday's top could be counted. This morning it looked like a nice countertrend rally was beginning, but it didn't get very far. This pattern looks exttremely weak, hard to say when it might take a breather.
The EUR daily Trend/Osc is once again flirting with a sell as it has so many times in recent weeks. It's a repeat of those prior patterns with prices below the uptrend line dating back to the August lows but the Dyn Osc tracking above the 80 level. Looks very much like a topping process.
Gold
Don't have time to work up Gold charts, but the strength of the selling today leaves the flat correction alternative mentioned yesterday in play, even though prices ran up past the 1416 level. Whatever the eventual EW pattern, today's strong drop would seem to indicate that a top of some sort is in at today's highs.
Minute W5 (green) and thus Minor W5 (red) of the rally from late August was quite possibly complete at today's highs. The strength of the selloff today certainly would seem to corroborate that.
Preferred Count
However, it is possible that the selling today is a "c" wave to Minute W4, with Minor W5 in the wings. If so, the market needs to rally almost immediately. Minute W1 topped @ ES 1196.50, so an ES print below that level invalidates this possibility. The ES bottomed today at 1206.25, so 1196.50 is not very far away. This alternate has a much lower probability IMO.
Alternate count
The daily Trend/Osc has the ES still in UP mode, if that swings to DOWN mode the top is confirmed. The question in that eventuality is what severity the correction will have.
AUD/US$
Sell signal on the hourly AUD Trend/Osc today. Prices broke below the uptrend line at 11 AM CST and then below 80 on the Dynamic Oscillator at 12 PM.
Daily AUD Trend/Osc is in solid UP mode, so at this point I'm inclined to ignore the hourly sell (except for selling long AUD which was done at mid-day today) and plan to go long on an hourly Trend/Osc buy signal.
EUR/US$
The EUR is turning into a train wreck (BTW this is one reason to believe the top is in on ES). Overnight a clear 5 waves down from last Thursday's top could be counted. This morning it looked like a nice countertrend rally was beginning, but it didn't get very far. This pattern looks exttremely weak, hard to say when it might take a breather.
The EUR daily Trend/Osc is once again flirting with a sell as it has so many times in recent weeks. It's a repeat of those prior patterns with prices below the uptrend line dating back to the August lows but the Dyn Osc tracking above the 80 level. Looks very much like a topping process.
Gold
Don't have time to work up Gold charts, but the strength of the selling today leaves the flat correction alternative mentioned yesterday in play, even though prices ran up past the 1416 level. Whatever the eventual EW pattern, today's strong drop would seem to indicate that a top of some sort is in at today's highs.
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