US Dollar Index, 4th June 2014 - Daily Bullish, Monthly Consolidating

US Dollar Index, Monthly -Triangle Pattern

After a 7-year decline from 2001, the index has remained in a contracting pattern which may eventually become a triangle. Farther multi-year dollar losses looks likely, and at this point we're looking for the formation of a corrective 'D?' leg down to confirm the triangle structure.


US Dollar Index, Weekly -Successful Support Test, But Momentum Still Bearish

Price successfully tested support four weeks ago. However, momentum remains bearish, and it is not unlikely that a horizontal box consolidation will be in play for the next month or two.


US Dollar Index, Daily - Bullish

The past two days' trading saw price probing above the significant 80.599 prior-high level. The rally from early May is not complete as yet, but momentum is declining (not shown). It is likely that the intermediate decline is over, and we should see a short-term corrective decline followed by a push to new highs in the coming weeks.

S&P 500 Update, 3rd June 2014 - Weakening Bullish

S&P 500 Daily, Weakening Bullish

Short term momentum is still going strong, but intermediate-term MACD is printing a bearish divergence. The index is also nearing the next cluster of resistance formed by three relationships at 1954.35.

The wave structure of the entire advance from October 2011 is still unclear, the short and shall retracements heavily implies that we are in a strong impulse wave 3 still, within a larger third wave. It has been 49 weeks since the advance from the end of the last wave 'b', and in 5 weeks that advance will be twice the previous wave 'a' in duration (27 weeks).

Any price below the 1862.36 level will mark the end of the short term move, and breaking the 1814.36 level will signal the end of the rally that began in February. What we're looking for is an outsized move to the downside that definitively marks the end of an intermediate-term move, crossing the 1737.92 level.

S&P 500 Update, 12th March 2014 - Bullish

S&P 500 Daily, Bullish

The decline highlighted in my previous post turned out to be a three-legged zig-zag after all, and not a sustainable move. Price has since taken out the previous would-be market top and changed my bias for the index to bullish. The depth of the said decline, represented by the first touch of my long-term moving average since Dec 2012, may signal a more complicated corrective structure in progress.

The rally from February's low appears to have completed a five-leg wave 'a' and a shallow wave 'b'. This is a somewhat uncomfortable interpretation though as wave 'b' represents only a 21% correction from the top of wave 'a'. However, the character of the rally did change after this period, and that is sometimes a sign that a new wave has begun.

If this is an irregular corrective pattern in progress, the first target, a 133.3% external retracement of the previous decline and a 58.6% projection of the current rally's wave 'a' from the end of wave 'b', is looming ahead. Should that target be broken, the next is at about 1920.


Weekly Time Frame Summary (refer to my other previous post for details):
- Currently still trading within wave 'C' of '3'
- Cycle high expected in March

US Indices Overview - 4th Feb 2014 - Bearish

Price Action

S&P 500 Daily, Bearish

DJIA Daily, Bearish

DJTA Daily, Bearish

Both the S&P500 and DJIA broke a previous trough amidst increasing bearish day volume, potentially signalling a mid-term bearish move underway. This idea is reinforced by the DJTA also having broken its uptrend about a week ago.


Market Breadth

NYSE NH-NL, Daily

December presented a clear bearish divergence, and when combined with yesterday's break of uptrends in the two indices covered makes a good case for an impending sustainable bear move.


Trade Ideas

Look to go short on weakest index components after a corrective rally.
Hedge long with ALXN, FB, FFIV, HAR, JNPR after their corrective declines.

Invalidation: Subsequent rally in indices are expected to be corrective in nature. Market outlook is invalidated if an impulse move materializes instead (5 legs). Watch for broken bearish momentum divergences to signal bullish trend resumption.

Gold/USD Update, 24th Jan 2014 - Bearish Weekly, Bullish Daily

Gold/USD Weekly, Bullish

We've got so far a large decline beginning from the middle of 2011. Given that we've had almost 12 years of price gains (1999 - 2011) a four-year correction is expected at minimum. Hence, my main interpretation, in white, calls for an impulse wave in progress, with bearish wave A of 3 presumed completed and bullish B of 3 in progress, beginning from Jun 2013. This implies that the correction will eventually turn out to be a three-legged zig-zag of some sort, the current unfinished but expected impulse move down from 2011 being the first leg of.

Alternatively, in red, I have the decline as a complex correction. In some ways this might be a better fit for the minimal 4-year duration expected and should be kept in mind. In this interpretation, prices are looking to complete the middle wave of the second three-legged decline. Leg 'A' of this second set of decline began in Sept 2012, and ends in June 2013 for a total duration of 38 weeks. The August high at 1433.31 this year is unlikely to be the end of the corrective rally as it is only 9 weeks in length (13 weeks is the expected minimum duration), so I am inclined towards another bullish impulse wave already in progress, that should take us to at least the 1433.31 level if not beyond.

In summary: Bearish until a cross of 1267.26 confirms a bullish trend on the daily chart, with 1433.31 expected to be the next significant resistance level.

EUR/USD Monthly Update, 27th December 2013 - Bullish

EUR/USD Monthly, Bullish

The current rally is presumed to be a possible wave 'B'. The advance looks unsteady with many overlapping bars, and has under-balanced in price with respect to it's previous decline.

We have resistance nearby at the 1.40 level, after which it should be clear sailing till about 1.42. I expect prices to continue upwards, with the next nearest time reversal date at Feb 2014.

S&P 500 Monthly Update, 23rd December 2013 - Bullish

S&P 500 Monthly, Bullish

The current month's bar is yet to be completed, but sits just below the 127.2% external replacement of the 2007 - 2009 decline. The current move is presumed to be a wave 'C' of '3' in progress and will potentially reverse only at the cluster around the 1950 level.

Time-wise, we're near a 38.2% of wave '1' duration from the end of wave '2'. The next potential reversal date would be on 3/2014, which is an 85.4% time projection of the previous high-to-high cycle from the last high. 4/2014 is also a possible reversal month, being 50% of wave '1'.

In summary, I am bullish on the index, but will keep an eye on how the next month finishes, and if we pass February without a reversal the market should continue up into Mar - Apr 2014.