Saturday, August 29, 2009

Issues arguing against the top of Primary Wave 2 here

One of the problems that I have with the market topping here is that we have not seen a single Hindenburg Omen. I would expect to see atleast one before we, this does leave the possibility of an A = C or one higher fib ratio for C to A type situation - possibly pointing to the 9,950 to 10,522 area on the Dow and 1,048, 1,090 to 1,158 on the SP500.

Gold is not cooperating. Pattern looks very much like danerics chart from last week. (Daneric's Elliott Waves) Break over 972 in Gold would be bad for the deflation trade. Best case scenario, in my opinion would be to get Peter Schiff and all the inflationists screaming victory if the trade seems to work even a little bit and then shock-the-monkey with the deflation trade. So, quick pop in Gold and then a drop. Deneric suggested that Gold could rally from this pattern even if the dollar is not cooperating or does not have a commensurate sell-off. 

We have to watch the Dollar pattern closely - as it is potentially unfinished. And the wave structure is very sloppy. Sloppy patterns can be successful, and there are some good things about the dollar action here, so, if the dollar index breaks over the declining trendlines at 77.62 decisively - then this would be a go for the dollar. If the dollar fails here - it does not have much lower to go in my opinion...probably 77 to 76.5ish. (let's hope gold does not make it to 1085 if it does breakout though)

There were three very small moves in the McClellan Oscillator last week - all in a small McClellan move usually indicates a big move is about to happen. At least one range day, but this is a little more abnormal so it could mean more. This is an argument that if we breakdown here, that its a serious breakdown. Otherwise, we could get a rally that's also a signifcant move.
© 2009 m3, ltd. All rights reserved.