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Saturday, August 8, 2009

Here are some scenarios I've put together. The first is very bullish. The other three are similar. None of them are particularly bearish. If we head straight down from hear I think we would have to make a new EW rule.

Pedram commented that wave three had already extended and it would be rare for wave five to also extend.

The a EUR/USD has long been an indicator of SPX performance. The the dollar is gaining serious strength. The Kijun-sen provided support for the Euro at 1.43388, and the market was turned back. The Kumo will also offer support at 1.40275. Should these levels fail the EUR/USD will very likely continue it's decent as per my long term count.

Relating this to the SPX I feel the USD will bounce off the Kijun-sen, and return to the 1.43 level. But the markets have diverged, and this may not affect the SPX in a substantial way. There may be a period of adjustment required during the near future before these markets begin to dance together again. I understand that other markets have also lost their bond, even so I'll be watching.

The Non Farm Payroll Data appears to be the impetus behind the radical moves we recently saw, but I'm not sure I understand the divergence. One thing I believe in is "sell on good news". It may take a few days, but after the "less bad" news has normalized, the market will recognize that worldwide, the economy is in serious trouble, and this was not good news.

Now that a lot of the "less bad" news is out maybe we can get on with reality. It's very interesting that news indicting that the economy is in serious trouble can provide strength just because it's not as bad as expected. Go figure!

The Ichimoku charts are bullish, and strength is also indicated by higher low, and the higher high on the candles. The only thing bearish about this chart is the distance from the Kumo. But even if it falls there are several levels of support below. The Tenkan-sen @ 993, and Kijun-sen @ 943 will both provide support as well as the Kumo at 920, but that Kumo is becoming rather thin, and may not be able to stop a movement if it breaks through the Kijun-sen.. That's a long way to fall and probably not in the near future .

Stochastics are at over bought levels. The MACD looks like it could soon turn and make a bearish cross, and the EWO has been indicating that this is a weak rally.
The $BPSPX indicator is at 80.20%. I said it would get here, but it still seems unreal. Surely a correction is in the near future. Yeah, I think I've heard myself say that before...

The VIX continues the steady downward path, and is now below both the Tenkan-sen and the Kijun-sen. The steadily declining Kumu is also indicating that the SPX will continue to make gains, but there is some thinning, and an upward curve next week.

Analysis presented on this Blog has only informational, and educational purpose, and does not represent a proposal for buying or selling currency contracts.

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