Dollar is Finding a Bottom

In the last two days the Dollar appears to be forming a bottom. You can see in the attached chart how its rapid decline has paused, and it even spiked above the upper trendline of its descent. Overnight it has fallen back inside, and it still may get to DX76 before bouncing. Currently it is right above DX77.

EWTrends adds to this a discussion of the circled technical indicators, which appear to have reversed. 

Sentiment is more bearish than at any time in history (at least since the Dollar was finally severed from gold in 1971).

The downward momentum stalled late last week when the Euro hit $1.40. The AUD is hovering around 98c and flirting with parity, hitting 99.2c so far.  

The most crisp analysis comes from Credit Suisse, which predicts a 100% chance of a rally from here based on net speculative positions. They believe QE2 has been fully priced into the USD "and then some." 

Comments

[MT]

Waverust, Ok you've convinced me. Many are stubborn waiting for a correction, a few are happily bullish.

http://i366.photobucket.com/albums/oo106/mtcharts/SPX.jpg

http://i366.photobucket.com/albums/oo106/mtcharts/DJR.jpg

[Account Deleted]

Dow Jones Futures above 11000: CLICK HERE

[Whitebear]

Market still up after days of top-calling.

[vipul garg]

what is 100% chance of a rally?

[Whitebear]

Offering "100% of a rally" is BS without a timeframe. I am also sure that there will be 100% of a chance of rain somewhere in the Amazon in the next 30 days.

[MT]

My guess is that DJR surpasses the april high and stay there for a few day's and SPX will run in to resistance of the april top and does not surpass. Expect then consolidation or a light correction and a final break of the april top.

[?]

what is 100% chance of a rally?

If you click on the link, CSFB is saying that there is a 100% of a rally for a 3 month holding period.

For a 1, 2 and 6 month holding period, it is only 80% accurate.

[Neo Tzu]

Hurst 6-7 day low hit on day 6......Not giving up on short side for 2 reasons

1. The BIG spiral date was 10/10 and bulls only have one near term spiral date left on 10/16
2. Next weeks 6-7 day low is also a 2.5 week low.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55478850

[Neo Tzu]

Big spiral dates have 10 day window on each side....10/10/2010 spiral should top with the smaller 10/16 spiral.

If this thing rallies AFTER 10/16 then I'll be surprised. So far this is just an exhaustion rally of no volume.

[Neo Tzu]

Equinox is 12/21/2010 - Subtract an F5 spiral of 66 days you get 10/16/2010 as next turn date.

Still adding to shorts.....Bulls have two hurdles to prove this move is legitimate.

1. Prove the SPX can hurdle flash crash recovery high reistance.
2. Prove the SPX can rally past 10/16/2010

[Neo Tzu]

not *Equinox, Solstice :)

[Mamma Boom Boom]

1174 has not shown that much resistance, but this is still a rough neighborhood.

[TigerPaw]

USD could print a 68 before EOY, 2010! GOLD could hit $1700 within eight weeks!

PREPARE!

UFO/ALIEN DISCLOSURE & MESSAGE TO THE MASSES WITHIN 5 WEEKS!

[Michael]

Like I've been posting for weeks and months . . . The BEARS just don't get it.

[Wave Rust]

MT

on DJR, those 3 lows from early 2008 are real resistance. get through those lows, and, through Maxine Waters' new scam for a pause in foreclosures (she's so damn desperate to save her hide), then maybe reit's might be a good sign for comm. and residential RE in the US.

somebody is ringing the spx 1180 bell.

wave rust

the advantage of years spent watching and trading the markets is wasted, if you die soon after figuring out how damned simple the markets really are.

[bob m]

Tiger Paw.. Do you have a source for that all caps msg or did you forget to refill your prescription?

[Neo Tzu]

My bowtie is back. If SPX can survive past 10/19 I'll reconsider...

[Wave Rust]

trying to not sound preachy or condescending, okay ,,,,

in a bullish move (like since Mar'09), imho, it's the momentum divergences that kill traders because they are looking at the wrong ones.

usually thay are focused on divergences at highs, but it's really the corrections and their divergences that tell you how bullish it is, or is not.

for example, look at a weekly chart of 5 or 6 indices. put as much data on the screen that you can. look at those extreme lows in any momo indicator. thats where you see index price lows at higher levels while the momo's spike back to the previous momo lows. thats a buy, that keeps on giving.

look at those small pullbacks from the March '09 low and their momo's. just a thing of beauty, imo.

very simple. very elegant. and, by golly, you can see why i said "let's just call the August 2010 low a 2 wave, and move on." :)

sermon over. LOL

wave rust

[Bird]

WR--are you saying "just do that"? Is that all you do when you put on a trade?

[Wave Rust]

neo sue
day trading spiral calendar dates yields the poor results you've had here.

carolan wrote about these dates for a totally different purpose and from a totally different perspective.

he's a pretty good trader and analyst, but you may be extrapolating a butterfly into a spaceship because both can fly. nobody cuts paper with lumberjack's saw, even though both are a form of wood.

wave rust

[Roger D.]

Well right on schedule as the Fed minutes yesterday set the stage for the final 5 wave thrust up. The bulls will be giddy with hyperinflation leading the way. The bears in total capitulation mode. A perfect ending for P2. What will cause it who knows, Foreclosuregate,Germany's high court Euro ruling,China finally saying screw you UST,all or none of the above. Wherever and whenever this thrust ends look for a big reversal.

Roger D.

http://www.screencast.com/users/fast996/folders/Default/media/2326baf0-9662-48e6-9a3f-360f7ace504e

[Neo Tzu]

wave crust....I'm dont usually respond to ankle-biters like you.....but wait until next week then I'll give a response.

[Wave Rust]

yelnick.

the usd is frustrating to analyze. it's useful and i watch it daily. but since yen is the heaviest weight, i watch that too. imo, it goes lower and $/gold goes higher, until they don't.

what surprises me is that i havent seen the favorite "tool" of some trader/bloggers, etc. used on the usd.

i don't think its much more than a continuation formation, but a head and shoulders with armpits at 79 or 80, puts usd index at 70ish.

do you think thats too "scary" to call for new lows on the USD at 70 in the near future?

the euro isnt far from 75% retrace at 1.4200, and thats just an afternoon spike away.

With the 2nd round of QE II being launched soon, fully booked berths ,,,, it's an SRO launch (remember the crowded decks of the Titanic when it sailed?) ,,,, getting to the lows, or a low sometime this year is not going to surprise me, but it may surprise the Swiss.

Imagine all of Europe, most of Asia calling the U.S. protectionist 'by fiat currency manipulation' by Christmas. :)

wave rust

[Mamma Boom Boom]

Thank you Michael.
As always, you're very helpful.

[Thrill]

I don't understand how people make this so difficult in here.... The Fed is practically screaming at you that they are putting a floor under stocks, and either this economy is improving or they'll keep raising the floor. That is a scientific fact, my opinion is that they also think this is a confidence issue and nothing breeds more confidence than a rising stock market. The ONLY guesswork is when to take profits in 2011.....

[Wave Rust]

neo sue
ankle biters! LOL

you just wait until next week too, cuz thats when I'm going to tell my mom that you called me an ankle biter.

you just wait.

if you thought I was putting you down about spiral dates, etc. then you're wrong.

if i wanted to put you down, i would have difficulty choosing from so many choices that you have shown in your prior posts.

imo, if you make a call that's wrong, then join the club. thats a part of trading. when wrong, change your call/trade whatever.

heck, don't get mad about somebody mentioning what you said. emotions are suicidal in trading.

heck, i'm wrong quite often. doesn't bother me. calling me names doesn't bother me either. i have been pissed at myself (years ago) and reacted less than politely to those who offered a counter argument to my call.

Eventually, I got over myself and began to listen to others ways, techniques and views. I learned something, then asked questions, and learned more. Then I asked more questions ,,, and so on.

I still learn things from people, and I have been trading longer than most people who would even give you a second thought. Lots of people helped me and still do. I find being helped by others, and helping others, is a great secret of living a great life.

cheer up, maybe your next call will do better.

wave rust

[Wave Rust]

Thrill,

yep

ala the david tepper interview, right? :)

simply said by him and unfolding as expected.

wave rust

[Wave Rust]

roger,
great line! :)

"Wherever and whenever this thrust ends look for a big reversal."

wave rust

[Roger D.]

ISRG did make top in April and they continue to sell it,even today right from the open. It has a open gap down at 160-170 and topped at 394.

Roger D.

http://www.screencast.com/users/fast996/folders/Default/media/87981cc3-4351-49fd-8222-b429a9babfb2

[Neo Tzu]

Market still up after days of top-calling.

I've been long for months into the October New Moon.

It's the Full Moon due October 22, 2010 that has the potential for an autumn panic.
https://www.mta.org/eweb/docs/1998DowAward.pdf

I'm not a bear, just looking for a swing trade lower into the 10/22 Full Moon. (Also dont expect a 1987 panic, just a 1986 type panic.)

[cory b]

Roger you have no credibility. But nobody else here does, either. Poor predictions. Might as well be randomly generated.

Prechter has excellent predictive value and you can take in decades of data. But it is anti-predictive. My guess is the louder/more publicized his calls the more reliably anti-predictive (NYT article, eg).

Hank seemed to have a better than random positive predictive value but his last call was a real stinker. He seems to have disappeared.

Lots of people here could do a good job writing pages-long essays on why their coin is going to roll heads next time.

[Thrill]

Wave Rust,

Amen brotha and when the game is rigged, all eyes on the referee! SPX will drop 20-25 pts when they first utter syllables that sound like "exit strategy" when played backwards.... sometime in 2011.

[yelnick]

wave, the argument for a USD bottom is based on QE being priced in .. if we bust through the 76 level in the DX there is no reasonable level below that to hang a hat on. Game over for the fiat system. It would put the Fed into a real dilemma - the Triffin Paradox - to decide to let the USD free fall vs keep long rates low. I would bet they let the USD fall, leading to a bigger crisis down the road.

[yelnick]

Mamma, the EWI counts are pretty well busted. They can cling to 1181 but almost always when a retrace goes above 78% it goes above 100% ie to new highs. Fractal Finance went bullish after the break above 1130 that stayed above, and at a larger time scale the break above 1150 (going back to Jan).

[?]

Wave Rust,

The EUR and not the JPY has the highest weighting in the USD Index.

https://www.theice.com/publicdocs/ICE_USDX_Brochure.pdf

[TigerPaw]

ForeclosureGate will become THE buzzterm of the next two years...watch. It's going viral this very moment.

[Thrill]

Cory b,

Are you just looking at Mama's tits or listening to her? Yeah, Roger D is wrong ALL the time, butt that makes him the perfect contrarian indicator... btw, I missed YOUR prediction.

[TigerPaw]

Or maybe "MersGate" --- I like that one better:)

[Wave Rust]

as simple as it gets, but this may be a hard trade, psychologically.

like buy lows, sell highs. both ends are hard.

this is why i have been so boringly bullish.

wave rust

[TigerPaw]

This Mers debacle could potentially bring the entire house of cards down --- this is a game-changer --- we could see a complete meltdown within 6-8 weeks.

Get your hedges and stops on, boys. Wave counts mean NOTHING right here, right now. Primal instincts will rule until this mess gets sorted out.

And yes, alien disclosure is coming --- within 6-8 weeks.

[chet]

what concerns me is this rally has zero volume. If smart money hedge funds and wall street specialist firms were anticipating higher prices they would be buying heavy longs and building inventory making volume surge

But there is no volume

http://stockcharts.com/h-sc/ui?s=$INDU

[Wave Rust]

?

yep you're right, I'm wrong.

whats really bad about that, is that I have known that for years but still remember it wrong! LOL dumbarse here

i'd be wasting my time trying to figure out why i remember it wrongly. too much aluminum accumulated in the brain, i think.

thanks.

wave rust

[Roger D.]

"Roger you have no credibility. But nobody else here does, either. Poor predictions. Might as well be randomly generated.

Prechter has excellent predictive value and you can take in decades of data. But it is anti-predictive. My guess is the louder/more publicized his calls the more reliably anti-predictive (NYT article, eg).

Hank seemed to have a better than random positive predictive value but his last call was a real stinker. He seems to have disappeared.

Lots of people here could do a good job writing pages-long essays on why their coin is going to roll heads next time."

Cory your exactly right,but my total view is that we are near the end of a grand supercycle bull market. I will be right and this stock market will not see these levels again in most of our lifetimes again. Japan has been in a bear market for 20 years and will probably continue to be in one for another 20.

Since the 660 bottom most market leaders have been in the blowoff supercycle 5th waves and some are making huge double tops here. This market is so close to topping now and when it does it will fall for months.

Best,
Roger D.

[Thrill]

Can somebody help me out here? Doesn't low volume mean a lack of HFT bot activity due to lack of volatility? Even if it means EVERYBODY'S in bonds, doesn't that bode well for stocks?

[TigerPaw]

CRASH ALERT! CRASH ALERT! CRASH ALERT!

[MHD]

Yelnick..... what new bearish count is EWI going to come up with now? After watching many Ewavers and their forecasts over the years, it's hard for me to believe it's still around! If nothing else it's good for a good laugh when they turn out to be wrong. Looks like Tony C. is the winner this time, but I'm sure his forecasts in the future will at some point be as bad as Bob P. Before the top of the credit bubble pop Tony C. was sure we were headed to 36,000 and in the early stages of a bull market. NOT! What would be really scary is if all Ewavers had bullish counts. Look out below!!

[?]

Wave Rust,

Actually, I believe you were right before the EUR was created. When that happened all the European currencies "merged" to create the EUR which made its weighting so high.

[chet]

What is the Hindenburg Omen saying now?

Anyone know?

[Mamma Boom Boom]

>Mamma, the EWI counts are pretty well busted.
Posted by: Yelnick | Wednesday, October 13, 2010 at 09:27 AM<

You know, I try not to put much weight in counts, in this environment. They're just one more tool. Like the one that reached out of my screen yesterday morning, punched me in the eye, and told me I was probably wrong on the very short term.

[MHD]

The Hindenburg Omen is full of hot air!