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Market Wire Update:
No Afternoon Wall Street Nap
In afternoon trade oil and gold are taking a huge trip lower, with oil off from 73.60 to 70.60 in two 30 minute time periods. Gold has reversed from 1145 to 1128 in the same time-frame, just as S&P trade drops from 1095 (the swing point posted yesterday) to test 1088 support. These are small percentage moves in S&P equity trade (0.3%), but are starting to increase towards 1% drops in the commodity markets.
The S&P futures market is holding 1087 support, and now will battle 1095 and then 1105 as target areas for any bullish moves today. The higher the S&P moves, the weaker the Usd will become.
The reaction historically would be to see increased Usd buying, as the move from stocks to bonds takes place, but instead we are seeing the major pairs do nothing more, as yet, than hold near-term support that was put in place in the Asian and European session. If major currency pairs hold 1.4650 on euro, 1.6180 on cable, 0.9000 on aussie, 1.0525 on cad, and 1.0280 on swissy, it will be a very clear signal that the Usd is running out of buying momentum.
We await the New Zealand interest rate announcement and press conference at 15:00 EDT, and look forward to Swiss and U.K. rate decisions on Thursday, all of which have the potential to turn each currency pair upside down as the news/statements/rates hit the wires.
TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index.
Macro View: The U.K.’s Annual Pre-Budget Release, stated; “Unemployment, and the number of home repossessions are much lower than many people expected. We are increasingly confident that we will, as we have been saying for some time, we see growth returning to the UK economy by the turn of the year. We’ve put the banking system back on a stronger footing; we have helped 330,000 people back into work just in the last month alone. We have supported so far about 150,000 businesses with more time to pay their tax bills.”
That is about as bullish a statement as we have seen in a long time, and if the dollar gets sold at some stage, may set Gbp/Usd for a move.
TheLFB Charting: Crude Oil Elliott Wave view
4 Hour chart trend: Mixed Price Points: 72.30, and 79.00 Looking for: A long wave ii pull-back towards 76.00
Momentum: Crude Oil momentum reads moved into Neutral mode on Nov 6th and have held sideways since then. The reads are swinging from overbought to oversold with no real passion to break either way. This is as range-bound as it gets from a trend and momentum read.
Elliott Wave: Oil moved lower but did not break through the 72.30 area, which would have confirmed a bear market as we mentioned few times over the pas few sessions. Overall, oil is showing a very complex price action with many overlaps, and as such we decided to take a look on a line chart. Here we see a lot more clearer picture with a bearish structure, since prices fell sharply from around the 79.00 region, where a red wave II) was completed.
Currently, the market looks to be in a Long pull-back mode seen in a black wave ii, after wave i hit the bottom around 72.30. Technical traders will look for a down-trend continuation once the new wave ii completes the move higher, somewhere around the 76.00 zone.
The bearish wave count remains valid so long as the market trades below 79.00 resistance.
TheLFB Charting: Gold Elliott Wave view
4 Hour chart trend: Mixed Price Points: 1137, and 1226 Looking for: A Long wave B) pull-back towards the 1180-1190
Momentum: Gold bullion moved into another long momentum cycle on the 3rd of Nov, and has held above the long break of 1060 that came with it. That Long trend is just about flattening out now. The pull-backs are getting bought when they hit an oversold 4 hour chart sentiment read, every 4-5 days.
Elliott Wave: Gold dropped almost $100 after the 1226 highs were hit, and after the MACD cross that was highlighted last week signaled price and momentum divergence. The temporary top of a Long wave III is in place, and as such, we are looking for a Short move of a larger corrective black wave IV.
Wave IV is a corrective wave, which means it should be sub-divided by at least three waves of a pull-back, labeled as waves A), B) and C) below. Currently, the market is trading in a Long corrective red wave B), after wave A) found the bottom yesterday around the 11140 region as expected.
The red wave B) is also a corrective wave that may reach the 1180-1190 resistance zone over the near-term, before the short trend can continue.
The wave count remains valid so long as the market stays below the 1126 highs.
TheLFB Charting: S&P Futures Elliott Wave view
4 Hour chart trend: Mixed Price Points: 1066, and 1118 Looking for: An ending diagonal
Momentum: S&P futures moved into long mode on Nov 13th and have held that trend, which has allowed the tests of the 4 hour chart support to be bought. There is a tight sideways channel forming and that is allowing the move from overbought to oversold and back again, to be completed over a 4-5 day period.
Elliott Wave: S&P futures hit the lows of the week on Tuesday, which pushed the major currency pairs lower. Overall, we are looking for a near-term recovery on the majors and a decline at the same time on dollar index, which matches perfectly with S&P expectations.
On the chart below we see that the market traded into the 1090 level and into the area around the diagonal support line, connected from 1025, and wave 1) lows. From this zone, we are expecting a bounce to the up-side, near the 1105 area, before the down-trend can continue.
A break of 1066 support will confirm a bear market, while a move through the 1118 top will signal a more complex wave 5) formation of an ending diagonal.
