Dow

Most Indices are still mixed, not all have clear 5 wave declines, and the recent selling did not push indicators to sell mode. But the wave count on the Dow was clear on the idea that the recent move up is 3 waves. Wave (b) on the hourly chart was clearly a triangle. So on the Dow the recent move up is wave b and wave c down with c=a points to 17780. At least this much we should see. Later we need to judge what to expect from there

Dow Theory at work

This is classic Dow theory at work as the New high in the S&P or Dow, is not confirmed by the NYSE Composite or Transports or Russel indices.

Risk On Risk Off

The inverse relationship between the US 10 year and the DJIA has often been a risk on risk off indicator. So this chart highlights all the breakout rallies in the 10 year bonds [falling rates], being associated with falling stock markets. Now this maybe completely contrary to what you hear in the popular media about how good lower rates are but has to do with FED policy and nothing to do with market determined rates. The asset allocation between equities and Bonds is a tight rope walk. In fact lower rates are often seen during periods of slowing growth and higher rates during periods of expansions, so the popular view of the Media is based on text book economics. 

Coming to the chart bonds prices have been falling for a while in a small range. No breakout yet but when we get the next move higher in the ten year [lower rates] you are likely to see another correction in the DJIA. Note the this is only an indication of direction and not the size of the move so that is another question all together.

Euro

Euro did waves i and ii and iii up should start soon.

Midcaps

BSE Midcap index touched the trendline of the highs, that makes the recent rise look like a wedge. While writing this report the Midcap index has broken the lower end of the wedge line so the pattern looks complete in most respects and should mark the start of a major decline in Midcaps and the market as a whole.

USDZAR

USDZAR - With the long term channel broken it best to believe that the ZAR has completed its weakening cycle and is now getting stronger against the dollar, correcting the entire 5 wave rise in the USDZAR. Another sign that the weak dollar is slowly taking over.

Crude

Crude has recovered as expected and I put out a note expecting 48.50. However we shuould be open to crude prices going beyond 48.50 and to retest the 51 high seen in May. Doing so above 51 prices can extend to the Monthly bollinger bands near 61 and the 2015 high near 63. So with the general rally in commodities we should be open to the idea that 51 maybe surpassed and we head towards 61-63.

DAX

DAX shows 3 lower tops now and the daily momentum again rolled over to the sell side. So pay attention to follow up action that would confirm a new low a more to come. Wave wise we have already competed wave C of a counter trend push and started to fall impulsively. Yes the trouble is still brewing the most in Europe.

Nasdaq 100

The Nasdaq 100 daily momentum is back in sell mode after completing 5 waves up in wave C, and the only thing left is to see averages break. The 20dma is at 4800 a close below which should see the decline aggravate.