Monday, December 14, 2009

Waiting for Next Big Move...

The market didn't help me out much today in sending any signals as to where the market will move in the short term, however it does appear that the upside is the path of least resistance still.

The key in the stock market is the dollar, which the stock market should move opposite of. The dollar appears to have bottomed and is in the process of unfolding in a 5 wave sequence. It's tough to get a good count on the waves right now because wave 2 labeled in the attached 4hr US dollar/Swiss franc chart doesn't have a corresponding 4th wave of similar degree. Also, the last few days of trading appears be unfolding a series of 4th and 5th waves, but does not fit well into a completed EWP count at the moment. The next big move in the dollar should help clear this up and give us a better idea of where we're out in the short term. But it does appear that upside momentum is waning, so a corrective dollar decline would not be a surprise. But I would use any decline at this point as a buying opportunity. I'm bullish the dollar all around right now.

If the dollar pulls back, the stock market should continue to rally. Notice on the attached daily S&P cash chart that the infamous ascending trendline has been broken with all this choppy trading lately; just another sign of a significant waning of uptrend momentum. Oftentimes markets will retest the underside of an ascending trendline, after its been broken, before it starts the major portion of its downtrend. So we'll see how strong of a ceiling this trendline acts like. The underside of the trendline will be at about the 1130 area Tuesday.

So unfortunately there's not much more to report at this point, and we'll have to wait to get more decisive action from this market before getting a better idea of the short term trend. So I remain:

Stock Market
short term neutral
long term bearish

US Dollar
short term neutral (as I prepare for a pullback)
long term bullish,

Precious Metals
short term neutral
longer term bearish


Gustavo said...


This is the beautiful of the rumours until now everybodys was talking about he death of the dollar. Now begin to talk about the death of the euro :-).

Todd said...

Hey Gustavo,

Yeah I know, but I hope that death of the euro talk comes much later because it will probably signal a dollar top. We should still have a looooooong way to go.

Fed announcement tomorrow should lead to some interesting action in currencies tomorrow.