Last time we spoke, I mentioned that we could see a further rally in the USD. Indeed we did. However, looking at the 60- min. chart through today a bearish and bullish case can be made. I've attached a chart of the bullish interpretation. Should the bearish case prevail, a new low will occur.
The same can be said for the ES_F. One can argue that the decline from 1182. 25 is a three wave structure and that today's wave pattern is tracing up in an impulsive manner or that the structure was corrective. Odds are that it is impulsive as the current decline from 1179.25 looks corrective, possibly a 4th wave at lower time frames. Expect a new high if the bullish scenario plays out. What I want to make clear to the readership is that there is no clear wave pattern. When I run into this, I simply wait for the market to commit to me before I commit to it and place my money at risk. Here's the market's position as of the close: Momentum: Remains OB on weekly. Daily time frame has turned down from OB area. 60 min chart level has turned down. Pattern: final wave.v of wave.c of wave.2 Time: The previous time relationships were negated. Trade Strategy: Neutral. Remain flat but looking to establish a bearish position as momentum indicators and price confirm a top is in place. Best of Trading
The ES_F made very little upward progress for the week. The major theme continues to be the relationship between the USD, cocommodities and indices. Therefore I will not be reiterating previous commentary. Rather, I will provide the weekly charts of the Dollar, Gold and the S&P in a multi page post. Readers can review the archive section for the month of October to obtain a greater understanding of the "all in one" relationships between the currency market, commodities and index futures. Here's the market position for the ES_F as of 10/22/10. Momentum: Remains OB on weekly. Daily time frame has made a bullish momentum reversal. 60 min chart level has also made a bullish reversal. Pattern: final wave.v of wave.c of wave.(2) Time: The previous time relationships were negated. Trade Strategy: Slightly bullish due to the triangle breakout following the period of low volatility (see 20-min. chart). Absence of any 5 waves down from 1186.25, I must favor the upside. However, the higher percentage trade remains a flat position but looking to establish a bearish position as momentum indicators and price confirm a top is in place. Best of Trading
In my week in review I stated that my position was "slightly bullish due to the triangle breakout following the period of low volatility (see 20-min. chart). Absence of any 5 waves down from 1186.25, I must favor the upside". After an inspiring positive open the market fizzled into the close. I have repeatedly mentioned that the greater risk in the market at this point was taking the bullish side of the trade. Since 10/13/2010, the ES-F have netted +8.50 points against deteriorating internals. Whether you're trading for points or ticks, you can see how dangerous trading this market has become. The market continues to make higher highs in 3 wave patterns. One would conclude that this is a final diagonal pattern but the chart doesn't count well. It's possible that w.2 ended today, yet every rise has been followed by 3 wave declines. Until I have confirmation of 5 waves down from a peak.... I'll sit on my hands. As soon as I can identify that a top is in place, I'll show a detailed chart. Here's the current market position for the E-mini's: Momentum: Remains OB on weekly. Daily time frame has made a bullish momentum reversal. 60 min chart has made a bearish reversal. Pattern: final wave.v of wave.c of wave.(2) Time: The previous time relationships were negated. Trade Strategy: Flat. Best of Trading
An interesting day in that the "turn down" in precious metals, crude oil and indexes all coincided with a continuation of a possible turn up in the dollar that began on Monday. As you know I've been pounding the table on the "all-in-one" concept whereas as the dollar goes, your investment is inversely related. Those market participants that were hoping that today's price action was the start of w.3 down in the ES_F were disappointed as the wave structure of the decline once again unfolded in three waves, followed by a late afternoon advance. This suggests that another recovery high will be made. The only factor that would negate this potential is for an initial close below 1167.75 and then a move below 1155.5. Here's the market's position at the close: Momentum: Remains OB on weekly. Daily time frame has turned down from an OB condition and a divergence between price is present. The 60 min is bullish. Pattern: final wave.v of wave.c of wave.2 Time: No change from previous comment. Trade Strategy: Remain flat but looking to establish a bearish position as 60 min momentum indicator makes a bearish reversal while price and the wave count confirm a top is in place. Best of Trading
Happy Halloween. While everyone is trick or treating tonight, Wall Street might be celebrating the holiday twice this coming week. One for the elections and the other for the FED's policy meeting. Both announcements should bring some added volatility to the market. In anticipation of these events, the market has meandered in a sideways affair for the better part of two weeks. Currently I am anticipating another recovery high as the wave structure from 10/25/2010 has been in three waves. One could speculate that the new recovery high would be struck right after all the "news" is out. When this coinsides with the wave pattern, a powerful "sell the news" event might be in order as bullish optimism reins. This would be in line with what typically transpires at market peaks. Throw in lagging momentum, UPVDV and NYSE ADVDEC oscillators and its clear that the market lacks the strength to maintain a sustained rally at this point. Therefore any further strength should be short lived. Here's the market's position as of 10/29/2010: Momentum: OB on Weekly, Daily and 60 min charts. Pattern: final wave.v of wave.c of wave.2 Time: No change from previous comment. Trade Strategy: Remain flat past news events but looking to establish a bearish position as 60 min momentum indicator makes a bearish reversal while price and the wave count confirm a top is in place. Best of Trading
Not much has changed from what I posted in my week in review. I still am expecting volatility and a new high. A break below 1167.75 would negate the immediate upside potential. Should a new high be struck after the FED's announcement, I am not expecting a sustained rally. If so, my analysis of the wave structure is incorrect. If I'm right, there's plenty of downside potential to cash in on. Bottom line, I'm not to eager to jump right in. I've been this way for what seems to be an eternity by now. My patience will pay off. Here's the market's position as of the close of today: Momentum Indicators: OB on Weekly and Daily. 60 min chart was slightly bearish but held what typically is support in bull markets. Pattern: final wave.v of wave.c of wave.2 Time: No change from previous comment. Trade Strategy: Remain flat past news events but looking to establish a bearish position as 60 min momentum indicator reaches OB, then makes a bearish reversal. Price and the wave count should confirm a top is in place. Best of Trading