Elliott Wave Live: Heard On The Street: A Weekly Perspective

Sunday, January 9, 2011

Heard On The Street: A Weekly Perspective

ANNOUNCEMENTS:

I'm currently working on my next issue of "Global Gains" that will be published to this blog around January 20, 2011. For those readers who may have missed my inaugural issue you can read it to get acclimated to my insights of the markets that I cover at: http://elliottwavelive.blogspot.com/2010/12/global-gains-monthly-perspective_20.html

ELLIOTT WAVE ANALYSIS:

The markets that I am going to discuss are the emini S&P, Commodities and the USD.

S&P

Friday's trade had a 16.25 range (the largest since 12/2/2010) in what appears to have been a stop running exercise. Price held Fibonacci support at 1256.5-1257.5 in a three wave structure that ends w.iv as seen at the 60 min chart level. Note that the Stoc indicator has turned up - a bullish momentum signature. My forecast remains looking higher to 1291.75 whereas w.5 = w.1 (see daily chart level). For Monday's trade I'll be looking to enter the market on any pullback to support and ride the final impulsive wave to it's termination.

USD

The USD once again tested the weekly 55-sma as seen on the weekly chart. While the previous test in early December of 2010 failed, the current strength is against the backdrop of a forthcoming stronger NFP # , that didn't materialize and lingering problems and haircuts in Europe. As of Fridays close, the market closed above the weekly 55-sma which is a bullish indication. Should 81.53 ( key resistance - see daily chart level) be taken out, then my expectation is for the dollar to potentially challenge 83.64 (critical resistance).

Several other currency pair relationships also show USD strength. I'll be watching the $USD-JPY, $AUD-USD, $USD-CAD pairs over the next week to further bolster my bullish analysis and wave count.

Commodities

Commodities took it on the chin in the later parts of this week. Given the negative correlation to the USD, a number of markets were adversely affected by the Dollar's strength This is no surprise. What is important to traders is to determine whether or not the commodity run is taking a breather (minor retracement) or whether we should expect a larger decline.

Looking at the CRB index, note that I have an operative wave count and an ALT (alternate count) on the chart. Given that many commodity markets show weekly bearish reversal candlestick patterns combined with the USD strength, I'm inclined to at least consider that w.(3) ended on 1/7/2011. While I can't be certain, it really doesn't matter because both interpretations point to further declines. As soon as I am able to determine which wave count is correct I will discuss them in a "flash alert". In the meantime, traders should adopt a neutral posture while recognizing that commodities , in general, have further upside after completing w.(4).

Best of Trading

No comments:

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Sunday, January 9, 2011

Heard On The Street: A Weekly Perspective

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