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Market Report – 10.20.2011

October 20, 2011 By Leave a Comment

The expectation is for more of risk off price action today.  Yesterday evening we made the case that the charts are setting up for USD strength, which will likely put pressure on equities.  

Our SPX count sees more weakness today in a minor wave b.  Support on a move lower comes in at 1188, 1185, and then 1167.  It is interesting to be aware that our completed wave a could be altered to see it as a three wave sequence with a completed abc correction.  This view is considered the alternate given price action in recent weeks, but it can become the favored count if we get the USD strength that seems to be setting up.

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SPX Daily Candle chart


A closer look at the SPX with a completion of minor a and b waves. 

SPX Hourly Candle chart


We maintain that the USD Index is at a critical point.  The USD should strengthen significantly based upon our count below.  Our bias is very bullish in the short and medium terms, but note that price action must stay above the approximate 76.40 level to maintain the bullish bias.

DX 4Hour Candle chart

The AUDUSD is pointing towards USD strength in the short term with minor wave 3 unfolding next.  Our wave count will be invalidated if price action pushed above 1.0354.

AUDUSD 4Hour Candle chart

We view Crude Oil as critical to indicate the risk on or risk off market sentiment.  Price action continues to hold at the trend line resistance.  A break either way will large implications on all the other markets.  Our bias is bearish, but our conviction is neutral at this point.  If we get the USD strength that seems to be setting up, the crude oil should sell off.

CL Daily Candle chart

The 10 Year Treasury yield is poised to push lower as well, which supports the risk off bias.

TNX Hourly Candle chart

Please feel free to comment on our analysis as we welcome feedback.  We would be more than happy to answer any questions that you might have.

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Market Report – 10.18.2011

October 18, 2011 By Leave a Comment

The Market Report – Evening Edition displayed many of the markets that may have made an important turn yesterday as risk off was the theme.  To view that Market Report click here.

The ES is looking very bearish after the correction higher last week.  We have been very clear about our view of the price action last week being corrective, and once it ran out of steam it would eventually fall just as quickly as it did on the squeeze higher.  Price action looks very bearish after a wave lower yesterday, if not much of a correction develops in the morning US session, we may see selling pressure push price action much lower in the near term.  Our bias is bearish for the next several weeks.

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ES Hourly Candle chart


The 10 year treasury yield is an important indicator of the risk off theme returning.  When treasury yields are going lower, equities go lower as well.  We see wave 5 black unfolding for the TNX, and expect price action to push lower to near our target that we have forecasted for months now of 15.  Our bias is bearish for the next several weeks, which is in line with our expectation with equities.  

TNX Weekly Candle chart


A closer look at the TNX sees a 3rd wave push lower on the hourly chart.  Price action should increase momentum to the downside.

TNX Hourly Candle chart

Also another key indicator of the risk off theme developing, is lower crude oil prices.  We have pointed out the critical resisance on the correction last week, and price action failed to push lower, and we expect that to be the completion of the 2nd wave of minor degree.  We are likely now in a 3rd wave push lower.  Our bias is bearish over the next several weeks.  Lower crude oil prices is also signaling lower equities and a stronger USD.

CL Daily Candle chart

S&P500 Forecast.

EURUSD Medium/Long term Market Forecast.

US Dollar Index Medium/Long term Market Forecast.

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Market Report – Evening Post – 10.12.11

October 12, 2011 By Leave a Comment

The SPX has hit some resistance at about 1220, but we may only see a short temperary retracement before the upside move continues higher to about 1257.  The continued move higher would complete a 5 wave move for wave “a”.  Then we can expect a wave “b” pull back to set up wave “c”.  We expect price action to remain volatile with large swings as depicted in the chart below.

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SPX Daily Candle chart


A shorter time frame chart for the SPX shows a possible trend channel breach which will give clarity to a retracement being underway.  Very short term bias is bearish.

SPX 1Hour Candle chart


Although we see further downside ahead for the USD index to approximately 76.97, which is the 50% fib retracement level, a bounce higher may unfold with the expected corresponding weakness in equities.  The bounce higher should prove to be temperary as wave “c” must complete with another push lower before the USD can continue on its way higher.   

DX 4Hour Candle chart

The EURUSD seems to have hit temperary resistance with a retracement underway.  We are expecting the correction lower to take price action to about the 1.3600 level for support.  Then another push higher will complete 5 waves up.

EURUSD 4Hour Candle chart

It appears that we may be seeing the end of an “a” “b” “c” correction.  Price action may continue a bit higher, but the wave structure could be complete at this point.  Our bias is bearish.  See our long term forecast of the 10 year treasury yield here.

TNX 1Hour Candle chart

S&P500 Forecast.

EURUSD Medium/Long term Market Forecast.

US Dollar Index Medium/Long term Market Forecast.

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Market Report – 10.10.2011

October 10, 2011 By Leave a Comment

A look at the 10 year treasury rate again and we see a potential bounce underway.  Our target has been and continues to be 15 at minimum, which could be weeks away.  A retracement to the 38.2% or 50% fib levels is anticipated at levels of 22.75 or 24.56. 

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TNX Weekly Candle chart


Gold continues to carve out a short term base that may carry price action higher in wave “b” to about 1773, which is the 61.8% fib retracement level.  We are targeting the 1300 level over the longer term, which could be several months away.  However, the pullback in Gold price will eventually be an amazing buying opportunity for a longer term position that should see Gold explode to higher price levels in the years ahead.

GC Weekly Candle chart

A shorter term chart sees the fib resitance levels that Gold will have to chop through.

GC Daily Candle chart



The USD Index is showing more corrective price aciton ahead, but the RSI is approaching oversold territory.  The current pullback is seen as a wave (ii), which should create a base for a stronger wave (iii) to unfold with much higher price levels to come.  

DX 4Hour Candle chart

The EURUSD continues to push higher in corrective price action at is approaching fib resistance for a possible retracement in the shorter term.  We do expect the EURUSD to move higher before the downtrend resumes in a 3rd wave which should move with more intensity to the downside.  

EURUSD Daily Candle chart

S&P500 Forecast.

EURUSD Medium/Long term Market Forecast.

US Dollar Index Medium/Long term Market Forecast.

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Market Report – 10.5.2011

October 5, 2011 By Leave a Comment

UPDATE – 10.5.2011 – 1:40pm cst

It is important to remain patient for a pullback in the S&P 500 and not chasing the retracement higher.  Still looking for price action to correct to about 1110 to enter to the long side.


UPDATE – 10.5.2011 – 9:45am cst

It appears that the S&P Index wants to run higher in the days ahead.  However, we are still looking for a pull back from the move higher.  If we get a three wave retracement, we are looking for a move to the upsde to potentially 1200 in the near term.  A test of 1100 is likely the target area.  There could be plenty of resistance along the way on a move higher, but a short covering rally seems to be around the corner.  More updates to come as price action unfolds……

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The S&P hourly candle found resistance at 161.8% fib extention on the close yesterday.  There could be resistance here.

SPX Hourly Candle chart

It is likely though that the S&P continues a bit higher to about 1135, which is 50% fib retracement of the move lover from the high of 1195.  We are looking at the price action as corrective and are expecting the SPX to return to the down trend soon.

SPX Hourly Candle chart

The EURUSD currently in a three wave retracement.  Price action clearly looks corrective.  Looking for 1.3410 which is the 50% fib retracement of the recent move lower.  

EURUSD 4 Hour Candle chart


The USDCAD is in a similar retracement of three waves.  We are looking for 1.0319, which is 38.2% fib retracement of the move higher over the last couple weeks.

USDCAD Hourly Candle chart


The 10 Year Treasury yield continues to push lower to our target region of 15, which we called months ago. 

TNX – 10 Year Trs – Daily Candle chart

Try out our free quarterly Market Overflow Newsletter.

EURUSD Medium/Long term Market Forecast.

US Dollar Index Medium/Long term Market Forecast.

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TNX – Medium/Long Term Forecast

September 12, 2011 By Leave a Comment

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