Dollar Index - at crossroads

In my Gold note I discussed that there are concerns about the view on the dollar and commodities pack as many trends diverged recently. Especially as Copper was falling and crude was rising and gold that was also falling is now rising, and the dollar index still appears to be in wave 2 down with wave 3 or C up at least pending before it can go into a substantial decline as the markets have started to recently anticipate.

The dollar index wave wise on a daily chart is in wave c of ii and reached 61.8% at 93.40. A good level for wave 2/B down to end and 3/C up to start. So let us wait and watch to see what is going on here. Ahead of the FED mixed signals may continue. But the air should clear up soon. For now look at each security chart for its own merit and do not correlate. So far this remains the best count.

Euro, a b wave

Euro fell in five waves and has so far risen in 3 waves, which is corrective. The next move down should be wave c. We do not have a reversal yet but are at 61.8% near 1.1418, which should not be crossed by wave b up. We are also close to the upper Bollinger band. If wave c down starts from here c=a would point to 1.09

Goldman Sachs - Financial Storm

If financials lead the way down then US financials are still not in buy mode. Here is Goldman Sachs. The stock formed a H&S last year and the recent rally hit the neckline and has been selling off slowly from there even as the major stock market indices edge higher. Are US financials giving a lead signal to the downside? time will tell.

Dax - deflected downwards

European indices remain the weakest and yesterday they were again deflected off the weekly Bollinger bands, with the daily momentum still in sell mode. The Dax is sitting on its daily averages a break below which would mean a test of its H&S neckline at 9880.

Switzerland - lower tops

Swiss market peaked in August of last year. From there each decline is follwed by a flag and another decline, and we have just completed a flag or rising channel at the recent high so the next move lower should have already started. 

Morgan Stanley - Triangle

In April I put out a chart of Morgan Stanley as it was into wave 4 up and wave 5 down could start. It has continued to inch higher and now the wave 4 pattern is a triangle into the recent high from where it is selling off. Prices are now closer to the falling trendline from the 2015 top, and the weekly Bollinger bands. So a very good level for wave 5 down to kick off and financials might just be what you want to watch while calling for another US market decline.

Wal Mart Stores - Only B

Long term readers would remember my wave counts on this one. In 2006 I marked it as wave 4 and wave 5 up starting. I was expecting it to outperform. Wave 1 of 5 was small and for a while looked like it truncated the long term 5th. But later it went on to complete a full 5 waves up in wave 5, on what were extremely thin volumes [see at the bottom]. So it was a classic 5th wave divergence in price and volume momentum.

Now that wave A down is complete wave B up is forming wave B has just passed above the 38.2% retracement mark, but as you can see wave B is forming a triangular pattern and wave e of B that is the final leg is forming. Once wave e up completes then we will start wave C down which will see wave C=A head towards 45. That would also put it in the range of the previous long term wave 4 circled which is ideal for a long term bottom.

Gold Bugs Index

The gold bugs index - I have reworked the wave count. So here wave 4 just ended and wave 5 up started. Wave 3 was shorter than wave 1 and so wave 5 would have a truncated Fibonacci target of 249 [current 227]. Alternately if prices keep extending beyond 249 then we have to consider that wave 3/3 is unfolding and we are in a rally that will see no meaningful corrections.

Copper

Copper - broke and started wave iii down, iii=i points to 1.90 as the next level. 2.08 and 2.11 are resistance levels

Crude

Crude, the waves continue to develop complex. So the final take on the new high yesterday is wave z of Y developing as an expanded flat and the next resistance is at 51.17 at the high of the trendline for the pattern which is also the Upper Bollinger band. Hopefully this is the last push up as prices have already broken the rising trendline from the April low.

CRB Index

The CRB Index is being driven up by its weightage in energy and agro. Here is an updated wave count. C=A was achieved in May however now that we are higher I consider the consolidation in May to be a running triangle in wave iv. Wave v of C is in progress.

The Bull market in Agro commodities

Agro commodities are slowly but surely taking off into a bull market as I have been anticipating for a long time.

Rice

Corn

Coffee

NYSE Composite

NYSE composite - provides a broader market index to track for US equities. As the S&P gets close to the swing highs made all of last year it is a major resistance zone. The NYSE composite is reaching close to the 4th wave of lower degree or Oct swing high from where markets declined. This level is often a strong resistance zone as well and good for the next move lower to start.