Dollar drop is obviously causing the oil & commodity spike. Bush and Paulson (Treasury Secy) talk of a strong Dollar policy but they certainly aren't following it. Dow has been going UP on Dollar weakness due to overseas money coming in (Dow looks cheap in Euros!), so it is unclear if the last two days DOWN have been end-of-month portfolio cleansing or a larger trend of foreign investors staying out until the see where the Dollar goes. This all feels like deja vu of the period from 1971-1974 when Nixon went off the Bretton Woods system and threw the world financial system into turmoil. I thought we had learned then that wasteful one-time rebates, cheapening the Dollar and inflating the currency didn't work. Nor does jawboning (remember WIN? Whip Inflation Now buttons). The big issue in this election should be Dollar and fiscal management; a few more months of this and maybe it will be! The Dollar has no known support levels because it has never been this weak.
Given the turn window next week (Mar 4-6), we might see a contrarian move - Dollar strengthens, Dow reverses up. Neely says to watch the speed of this decline, if it slows, he would expect a continued complex pattern rather than a sudden slide down. As to the Dollar, Neely called this spike. The Euro/Dollar ratio is following his prediction closely! Worth checiking out if you are currency trading. We will see later today what Prechter thinks. Will his nested 1-2's hold?
New charts posted at http://www.wavechart.com/free_elliott_wave_stock_market_forecast.htm. Today's decline took the DJIA back to its previous trendchannel resistance line...now support. Rally to new highs should begin from current area.
Posted by: wavechart.com | Friday, February 29, 2008 at 02:17 PM
Regarding March 4-6 turn window, what is it based on?
thx
Posted by: EN | Sunday, March 02, 2008 at 07:32 AM
EN, the turn window this coming week is from several sources. Based on Lucas numbers, Fib numbers, and I suspect a bit of astrology (which I don't buy into). Not from EWI; they will soon reveal a turn area around Mar 21, which has been a turn of note in the S&P for most of the past 5 years.
Posted by: yelnick | Sunday, March 02, 2008 at 04:23 PM