The stock market had a nice reversal midday which showed some promise but was quickly erased and new highs were established telling us Minute wave ((ii)) is not over. I zoomed in on the wave count I'm tracking above. The conclusion of Minute wave ((ii)) is near. The market rally seems to be fueled by short covering on risk reduction going into Bernanke's speech Friday as well as the hopeful perma-bulls thinking Bernanke will say something magnificant Friday. I have no idea what will happen, nor do I care. The charts are what talk to me and....shhhhhh, .listen.......(whispering) the charts are telling me that Minute wave ((ii)) is almost finished and a reversal to the downside is near. And just in time for Bernanke's comments Friday. There's an open gap and a fibonacci retracement level at the 1190 area that should mark a stopping point for this rally, if not sooner. If correct, the selloff from there will be huge, at least 70 S&P points in a hurry. But a break above 1208.47 will invalidate this bearish view and put me on the sidelines until things clear up.
Bottom line: the markets are eyeing Bernanke's Friday comments, so look for the timing of the reversal to be between Thursday and Monday, and look for the price of reversal to be at around 1190 in the S&P cash index, if not sooner. Only a break above 1208.47 will negate this bearish view.
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Well the euro may be a mess, but the Brisith pound is telling us a very clear story here, and it's bearish. The 4hr chart I made this morning is above and shows a nice clean head and shoulders top accompanied by textbook diverging momentum during the head and shoulders process. The break of the neckline and sharp selloff is a clue that this pair is in trouble. Despite the euro holding firm, the fact that the British pound has appeared to have topped against the US dollar, and gold's big top and selloff today, it's possible the US dollar is set to surge big here, which is bearish for the GPB and EUR and other majors.
I got short the GBP/USD today, I think the dollar is set to surge while gold and silver continue to freefall.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.