Dear Members,

CBOE VIX - A year of Volatility spikes

Vix and the Dow

Crude

`Crude peaked near the trendline of the two previous highs. This can mean that we are still developing a triangle as shown by the blue lines. 52.42 was the recent high and till it is not crossed we have gone up in 3 waves so far. The next move lower would then be in 3 waves to the lower end of the triangle to 43.40$. 

Dow

The Dow hourly chart below looks for triangles to identify final moves. There are two triangles the first would be a wave b pattern and the second a ivth wave that preceded the recent big jump in US equities. So this should be a final move in this set up. AT 19600 and an RSI of 83 we are at the extreme for this move and a correction should be around the corner.

December Seasonality

This Video explains the seasonality for Dec showing charts from 2011 onward you get the effect of what happens due to the second half being a holiday mood. Most of the moves if any occur before the 20th. [3 mins video]

http://screencast-o-matic.com/watch/cDlQhTQFkV

Dollar Index

Finally I find EWI in agreement to some extent to the view that I have been publishing that the Dollar might be at the fag end of its long drawn bull run. They were right and up until recently I did not differ with them. They acknowledge that at 102 targets are achieved and the only difference is in wave counts. So given that today the Dollar index completed a 3 wave decline from the recent high took support at the lower Bollinger band and rallied, I will for a moment consider this wave count below again. I was with it till a few months back till that triangle formed at the end of the pattern. So i would mark the end of the 4th wave after the triangle. From there on I can agree with them now that you can mark it as 1-2-3-4. And then wave 5 of C up the final and last move in the dollar has started amidst the highest optimism that it will go on forever. But 5th waves end and this one will too. However if this wave count is right then we will see a final push above 102 to maybe 103.5 at the upper trendline shown below is possible. Maybe we will just hit 102 in a double top. Let me also add that 102 was important as it was 61.8% retracement long term. However sometimes we get 66% and that is at 104.20. Yesterdays low of 99.49 is the pivot for this.

Euro

The same interpretation for the dollar index cannot be made on the Euro, because the waves marked 1 and 4 in the dollar, have overlapped in the Euro. So here is what I think this volatile range is. Wave C of E is forming a series of large 3 wave moves both ways and this could be one large expanding triangle at the bottom. That allows for one more move down to 1.05 or a throw under it as a false breakout in wave e down. That final round of panic selling should complete the pattern.

Crude

Crude - 49.20/49.61 are support levels that support the idea that the recent dip is wave iv and the next move higher will breakout above 52.45 and head to 61.

Nikkei

Japan Equities completed a A-B-C advance as wave C just did 5 waves up. So a good reason to think that the top is in or close for Japan that has been one of the better performing markets recently. Note here wave B was triangular.

USDGBP

USDGBP remains in a larger degree 4th wave correction. This can go on for weeks and months. The current structure is wave c down. Wave 4 can develop as a triangle. Then this 3 wave decline would be wave A of the triangle. The worst case for 4th wave is the 4th wave of lower degree and that is near the 0.743 low seen in Sept.

US 10 year T Notes

US T notes have multiple positive divergences and a trend reversal into a multi week wave 2 rally is just round the corner. The move should confirm what I am calling the Great Asset Class Inversion in the most recent Long Short Report for December.

PSU index

The BSE PSU stocks index is critically poised at the end of a long multi year triangle. If it does not breakout of the upper end of the range then it is an X wave and gets followed by a long decline to the lower end of the range or maybe lower in wave Y. So watch how this segment does in the coming days as the big picture clears up.