US Dollar ~ 28 February 2011

The US Dollar hit a new yearly low today so I think it's time to have a look at the bigger picture again:

The $DXY is near the lower support line of a multi-year triangle right now thus as long as we stay above 76ish we could see an intermediate bottom around these levels and a bounce probably even up to the high 80's to the resistance line.

I don't think such a big rally can happen without a correction in the stock market though so we have to watch the SPX closely.

S&P 500 ~ Pre-Market Warm-Up ~ 28 February 2011

The reached the low 1320's on Friday afternoon which was my target for a potential wave [ii] top.

As said though, I'm only bearish if we get a daily close below the 1300ish level, I'd like to revise that level to 1290.
Above 1325 (daily close) we should see new highs - preferred target area is still the 1360ish area.


I'm sure you had a look at the daily chart over the weekend. It's interesting that in log scale the support line has been breached and in arithmetic scale the support line held:

You probably find this chart on bull blogs...

...and this one on bear blogs... : )

As you can see I'm not sure which way the market is going. Futures are up at ES 1325 right now though, so it looks quite bullish at the moment. Additionally, March starts tomorrow and the first day of the month has recently been (very) bullish. But may be bears take the bulls by surprise and break below 1300 again. ; )

Have a nice week!

S&P 500 ~ Intraday Update 1 ~ 25 February 2011

When I looked at the chart this morning I thought we'd seen this pattern before:

Jan 20/21th looks very similar imo:

When I zoomed out I noticed that the fractal is actually much bigger:

(Jan 18th = Feb 18th; Jan 20th = Feb 24th)

As you can see the fractal and the EW count support higher prices. There is a slight differnce though, while the fractal says we should see new highs I think we'll only see a correction up to the low 1320's to complete a second wave (a break above 1325 though would lead to a new high imo).

S&P 500 ~ Intraday Update 2 ~ 24 February 2011

Bulls MIA so far!

Just a short update to give you the important levels:

1320-25
1310
1300
1286-90 (open gap)

ES ~ Intraday Update 1 ~ 24 February 2011

Breakout and backtest?

ES ~ Pre-Market Warm-Up ~ 24 February 2011

The ES made a new low overnight at 1293.5. Since then the market has rallied and is now at the upper channel line again.

If we can break out we should finally get a bounce (probably up to 1320ish else another sell off down to the lower channel line again is likely.

S&P 500 ~ Intraday Update 2 ~ 23 February 2011

As I said a few minutes ago: a break of 1310 should lead to a sell off to 1300 - and there we are lol.

I don't think we'll go much lower today. But just in case all hell breaks loose my next target is the open gap at 1286.

S&P 500 ~ Intraday Update 1 ~ 23 February 2011

The SPX hit the 50 % retracement this morning and if the 1310ish level holds we should get a bounce.

It's even possible to count five waves down from the 1344 top. As I said before though, it's too early to tell if this is just another correction or the start of a bigger sell off.

If we get above today's high we should see a rally to at least 1325ish. A break below 1310ish would open the door for a sell off to 1300ish.

S&P 500 ~ Elliott Wave Count ~ 22 February 2011

Big sell off today - the SPX lost more than 2 %.

The SPX broke out of the wedge in the morning, retested the broken wedge support line a bit later and then sold off down into the 1310ish support area.

Today's sell off is very similar to the one on Jan 28th, so, it'll be very interesting to see how far we bounce from here. If today was only a correction then we should see new highs within just a few days. If this sell off is real though wait for a convincing break of 1310ish and 1300ish.

May be you remember that I wrote that the US Dollar usually bottoms three weeks before the SPX tops. Well, the US Dollar bottomed on Feb 1st and the SPX topped on Feb 18th, thus this pattern looks pretty good so far.

S&P 500 ~ Intraday Update 3 ~ 22 February 2011

Wow! We're already at the 38 % retracement!

If it's only a correction we should turn here imo because we got a nice wave relationship (a=c), else a trend change in the making gets more and more likely.

S&P 500 ~ Intraday Update 2 ~ 22 February 2011

The previous support line held and the SPX is back at its daily low again. If it breaks we should see more downside and 1310 is likely..

S&P 500 ~ Intraday Update 1 ~ 22 February 2011

That's why I said wait for the open first lol:

It looks like we'll get the same pattern again. Big sharp sell off followed by an even bigger sharper rally. The broken support line is now at around 1337, so if this sell off is real this level should provide resistance, else we'll see new highs imo.

S&P 500 ~ Update ~ 21 February 2011

The US markets were closed today, we saw quite a big sell off in the ES though - it's down 1 %.

It looks like a wedge is forming in the SPX and if it breaks we could see some correction down to the 1300/10ish area or even further. Till now the market isn't showing any sign of weakness though, thus be careful if you try to short!

Next upside target is the 1360 area and support is 1338ish (we're below it right now so a move to 1300/10 looks likely but wait for the open tomorrow morning!).

S&P 500 ~ Elliott Wave Count ~ 17 February 2011

I don't really have to add anything to the last few updates: the trend is up and the pattern is always the same: rally - retest old high - rally - retest old high - rally - ... - etc.

As long as the support line holds the short-term trend is up and my next target area is 1360ish.

EUR/USD ~ Elliott Wave Count ~ 17 February 2011

The EUR/USD refuses to break below 1.35ish so far. We got a dip below 1.35 but on a daily basis we couldn't close below it.

So far we can count three waves down from 1.386 thus it could be a completed zigzag, i.e. 1.343 was the low and higher prices are to come. This scenario is very likely if we break out of the wedge and get a rally above 1.3750ish.

My preferred scenario though is that we got a i-ii-i-ii from 1.386 because the rally from 1.343ish looks corrective i.e. another move lower is very likely. I still think that if we get a convincing break of 1.35ish we'll see much lower prices later this year.

S&P 500 ~ Elliott Wave Count ~ 16 February 2011

The SPX hit my first target around 1335 today.

Looking at the chart it appears as an ending diagonal is forming. I mentioned before though that the trend is still up and we could see 1360ish should 1335ish break:

As long as 1310ish holds bulls are in control. Below that level bears may finally get their correction. I'd like to see a daily close below 1300 first before going short though.

I'm back

Just returned and as far as I can see I haven't missed much... : )

I'll answer all the emails and post an SPX, EUR/USD & DXY update later today.

S&P 500 ~ Elliott Wave Count ~ 12 February 2011

The SPX rallied on Friday and almost hit my first target at 1335ish (2x666.79/wave [i]=[v]). I can count five waves from the 1275 lows now:

As said earlier this week, this rally looks very similar to the December rally so that's why I added a possible alternative count. A convincing break of 1335ish should lead to a rally to 1360ish (i.e. wave iii underway); a break of 1310ish though would be a first sign that the top could be in.  The trend is still up so if you try to short please use stops since shorts are still countertrend.

We may already know on Monday or Tuesday which count is underway. If anything important happens I'll post an update; there won't be many updates till Wednesday though since I'm heading for Arosa tonight for a short ski vacation:

Have a nice weekend! : )

30-Year US Bonds ~ 11 February 2011

I had a closer look at the US Bonds this morning and in my opinion this is one of the nicest long term charts I've ever seen:

We're near the lower support line again so odds favor a bounce here. If you have a look at the shorter term chart below you can see that we got five waves down from the August 2010 top, so, also from an elliott wave perspective at least a short term rally is likely:

I don't expect a big rally though but rather only a retracement of the move from 136ish down to 116ish. After that, another five wave move down should follow and possibly even break the multi-decade support line. But as I said, it's been support for more than twenty years and I'm sure it'll be heavily defended!

S&P 500 ~ Elliott Wave Count ~ 10 February 2011

A usual day today: An early sell off and a rally for the rest of the day.

The SPX hit the 1310ish support area today and rallied from there. As I said yesterday this rally feels like we're in December again:

Should we get above 1325 I expect a rally to 1335ish.

As posted yesterday I'm not sure whether 1325 was already the wave (iii) top or only wave i of (iii), it's to early to tell:

The circles are there to highlight how the corrections always look the same: a sharp sell off followed by a rally just as sharp. Until this pattern changes I don't expect a trend change.

US Dollar ~ 10 February 2011

Overnight, the ES sold off and the US Dollar rallied back to the neckline.

Watch for a convincing break of 78.5 (1.35 in the EUR/USD):

S&P 500 ~ Elliott Wave Count 9 February 2011

The SPX has been going sideways since Monday and it looks like this is just another consolidation before the next rally.

I think you've already noticed that February 1st looks very similar to Sept and Dec 1st last year and I think you all remember what followed:

September was up 90 handles, December 80 handles.

If we add 80-90 points to the January closing price we get 1370ish right in my next big target area.


The 1310ish level should be support now. Until we break below 1275 the uptrend is still intact. Next targets are 1335ish and then 1350-70.

Short term it looks like we've completed four waves from 1275 so far. The potential wave (iii) looks a bit short so it may be only wave i of (iii) and iii of (iii) has yet to come (similar to December).

S&P 500 ~ Pre-Market Warm-Up 8 February 2011

The SPX hit 1323 yesterday. This rally entered its seventh month and so far there is no sign that it'll stop anytime soon.

Next targets above are the 1335ish level where wave [i] equals wave [v]. However, I do not expect the rally to end there. I think it'll hit 1350-70 before the bears get there next chance again. Important support still is at 1260-75. If we decline below that, I think, we'll revisit the 1220ish area again.


As per my observation the Dollar usually bottoms three weeks before the market tops.

There is a potential USD bottom at 77 / EUR/USD top at 1.3850. Confirmation that the bottom/top is in we get on a daily close above 78.50/below 1.35. So if we get the confirmation expect a stock market top late February.

The EUR/USD declined a bit further than I expected, we're getting the bounce towards 1.37ish now though:

As said before, the start looks promising for the bears but we learned last week that one should go short only after the downtrend is confirmed and not before. ; ) So, watch for a convincing break of 1.35ish.

The Dollar Index may be forming the right shoulder of a big inverse H&S. Watch for a breach of the neckline at 78.5.

Update

There'll be a new update tomorrow morning.

Sorry for the delay.

Pre-Market Warm-Up 4 February 2011

The job numbers were pretty much a non-event, the ES is still at the same level we were before the release.

The SPX seems to be in wave (v) (see yesterday's chart) which may end anytime soon. After that we have to watch what happens; if we see a corrective move to 1300ish, then another rally to much higher levels is very likely, should we break below 1300ish and then below 1275! though, then the rally should have topped.


I don't post EUR/USD charts very frequently but there may be a very nice pattern unfolding right now:

There appears to be a five wave move down from the top. A retracement to 1.37-38 would form a pretty nice H&S.

S&P 500 ~ Elliott Wave Count ~ 2 February 2011

Today's tape certainly felt like a fourth wave...

Nothing happened since my intraday update - still think wave (iv) is underway and another push higher to 1313 should follow later this week:

S&P 500 ~ Intraday Update 1 ~ 2 February 2011

After yesterday's big rally the market is going nowhere today.

It looks like a fourth wave is forming, may be unfolding in a triangle:

After that I expect another push higher, potential target 1313, to complete the motive wave which started at 1275. This could complete wave [v] (as shown in the chart) or only wave (i) of [v], so place stops if you try to short. ; )

S&P 500 ~ Intraday Update 1 ~ 1 February 2011

I guess the right answer is "gap and rally" lol : )

There wasn't even a small correction at the 1300 level. Next target should be the 1313 level, above that I have to look for some targets first... : )

I think what we've seen over the past week was a fourth wave flat. That's called bad luck I think... last April I counted this sideways movement as a fourth wave which was wrong (since we went lower) and this time I decided to follow the April fractal... : )

The-rally-is-over-level is now at 1275 (1271 before) the second (conservative) level remains at 1260ish.

S&P 500 ~ Pre-Market Warm-Up ~ 1 February 2011

The ES is trading around the 1290 level right now which equals SPX 1293. So we're less than 1 % below the yearly highs.

It'll be very interesting to see what happens after the open. Gap and crap or gap and rally?

If we rally there should be some resistance at the recent highs at 1300 and then 1313, if we sell off a gap close is very likely and the April fractal may indeed be underway.