Sunday, June 28, 2009
Analysis of US Dollar
U.S. Dollar has had a small rally after completing the .618 retrace area of .78 a few weeks ago. It is suspect from this that we could be looking at another leg down coming shortly. It must be kept in mind however that until the .78 area is broken the possibility for the rally to further does continue. Should the dollar collapse, prices above $1.50 in the Euro and $1.70 in the GBP could be reached along with the flight to Gold.
Analysis of Gold
The .618 Fibonacci level at $913 has held and the market rallied over $30 oz in a few days. The double top potential still exists HOWEVER any move above $990 could forecast much higher prices to come and possibly in the order of $1200 an ounce.
Market Outlook
The Nasdaq which has led since the beginning of the year continues to do so while the Dow Jones has gotten weaker and weaker as can be seen on a daily chart. This same scenario happens to be a replica from the past when in 2000 the Nasdaq kept forging
ahead while the Dow kept weakening. It eventually played out with the Nasdaq dropping 85% in the following 3 years. When the Market hit the March 6 bottom we predicted a rally greater then any one that had taken place in recent history which has indeed occurred BUT we are now at a point where the Banking and Finance stocks have not exceeded previous highs.
The question now becomes do we make new highs in the Nasdaq followed with further divergence in the Dow and S&P before we sell off?
Certainly going below 870 for the S&P and 8100 for the Dow puts the Bears back in the drivers seat and from that point would not take much to eventually break through the March lows but for now the next step to follow is whether those highs will be broken.
TRADE IDEA::
Shorting the market in the window of 938 to 945 with a stop at 960 was worth the risk for those with high risk tolerance. Any drop below 888 is now confirmation of lower lows towards the 840 area
ahead while the Dow kept weakening. It eventually played out with the Nasdaq dropping 85% in the following 3 years. When the Market hit the March 6 bottom we predicted a rally greater then any one that had taken place in recent history which has indeed occurred BUT we are now at a point where the Banking and Finance stocks have not exceeded previous highs.
The question now becomes do we make new highs in the Nasdaq followed with further divergence in the Dow and S&P before we sell off?
Certainly going below 870 for the S&P and 8100 for the Dow puts the Bears back in the drivers seat and from that point would not take much to eventually break through the March lows but for now the next step to follow is whether those highs will be broken.
TRADE IDEA::
Shorting the market in the window of 938 to 945 with a stop at 960 was worth the risk for those with high risk tolerance. Any drop below 888 is now confirmation of lower lows towards the 840 area
Analysis of Crude
It appears that we have a completed wave structure up, a nice zigzag for A (white), and are in the process of a B down. My best guess is that B down will be a Elliott Wave flat or triangle based on the current structure. My count has crude completing an A (cyan) down and working on B up. I'm currently thinking about shorting crude via USO July 40 puts. I current would look at the 57-61 area for profit.
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