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

[Wave Rust]

?

u just trying to make an old oyster like me smell (feel) better about being wrong.

thanks for the kindness.

wave rust

BTW,
I'm getting a sense that this flying pig needs a rest.

going to cash now but not short ,,,, maybe leave some money on the table but thats just good manners. :)

in the morn, may be the next flash crash wanna-be head fakery.

[MHD]

Bob P. was extremely bearish in 2003 as the market bottomed and went to new highs. Seems the same thing might be happening again. The Feds will continue to screw Bob and his forecasts as I have no doubt that if there was no interference by the Feds and Congress, his third wave and bearish outlook would have come to pass. Alan, and now Ben continue to screw Bob and his forecasts to no end. And the sad fact is Bob P. never seems to learn.

[Roger D.]

A good example of the Grand Supercycle Irregular B tops in some market leaders. We have 5 up in the monthly in the final C wave. We are on fumes here and a perfectly timed top in October '10. As everybody expects hyperinflation,this coming breathtaking collapse will quickly tell that a killer deflation is in the cards.

Roger D.

http://www.screencast.com/users/fast996/folders/Default/media/29b9d521-f01b-4a30-9f1b-a3043748afbd

[alesum]

Keep up the good job.
Alesum:summarizing the world.

[MHD]

Could this possibly be:
Bond market is wrong
ECRI index is wrong
Hindenburg Omen is wrong
Insiders selling massive amounts of stock and buying almost nothing are wrong
Most Ewavers bearish counts are wrong
Deflation....wrong
Roger D.....wrong :)
3.4% mutual fund cash=top.....wrong
low volume on huge run up....doesn't mean a thing
Even Yelnick had this one wrong
Whole financial system based on fraud...a good kind of wrong

Stock market and Tony C.=the few who were right

Go Figure

[Wave Rust]

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."

that fear of a 'no bottom/support below 76' may be real and valid. but it may not be accurate. fwiw, 69-70 is the extreme for a low, as of today. (notice how many caveats there are in that statements. lol)

letting it fall, will actually help it find a quick bottom and then bounce. who is going to buy the low? traders and global creditors will when the sellers run out of USD inventory.

i'm sure you remember the good old days when you could just trade some currency on the futures markets. it was buy yen sell swissie buy cable etc. But now, you have to have such a frikkin tractor trailer full of eyeballs watching 24 hrs a day because everything is so danged globally connected directly, that all a trader can do is pick a cross pair, wait for it to start trending, and then get with the trend till you get stopped out.

so, back to the fear of falling, it will get really bad at the lows, and that may coincide with a high in stox and gold.

Fear is good. It makes people change their behavior. like the current fear of becoming summarily un-elected in 3 weeks. lolol

lots of "come to Jesus" marxist moments out on the campaign trail. so enjoyable, seeing the creeps groveling and denying their culpability.

that 1894 midterm election is looking like a great ideal result.

As far as your 'game over' for fiat currency comment, it implies that you can kill something so ephemeral as a fiat currency, or any currency not based on some quantifiable value ,,, like gold. can you kill a ghost, even if you fear the ghost?

fiat currencies are like all art. the eye of the beholder and the size of his wallet determines how much the beholder will pay. call me jaded, but getting the dollar genie back in the bottle requires you capture the genie and also find a new bottle big enough to hold him, because he's humongous now.

wave rust

[Neo Tzu]

SPX just hit a 1.618 advance off the 10/4 low and is stalling.

Scaling one more short position in this 1.618 SPX 1183 area....this is position 5 of 6 of my swing scale.

I have 1 more scale short trade left will it by Friday/Monday then use 10/19 as my time stop.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=55479609

This SPX 1190 1.618 zone is going to be tough to crack....Bulls have 2 days left to crack it and take my money....

[Wave Rust]

Thrill, chet

low volume with rising price, early in a new bull market is highly desirable.

the less volume the better, imo. it does make the intraday volume spikes extra powerful, but if at the openings, then I consider it just more retail traders jumping in, who then try to figure out what to do when the stock or index turns flat later in the day.

low volume is good because it means people are still scared. that flash crash was a blessing to bulls. it was getting frothy, kind of like now. but this one isn't done yet.

imo, only NDX will be above the the April highs when we see another good but brief correction ,,,, probably right after the election and into thanksgiving. but i could be wrong though. so, i'm using ever tighter stops on longs.

thats my view of loving low volume.

wave rust

[Roger D.]

I've heard it all before,this time is different. You cannot defy gravity,at some point the musuc stops,it always does.

BTW Tony C. is the worst of the bunch. Soon Bernanke will be running for his life as the angry mobs look to serve him a plate of retribution. They did the same to Mussolini. It won't be pretty.

[yelnick]

MHD, it will be curiously interesting to see how they spin this one! The EWT came out this weekend and encouraged the faithful to go short. Theoretically a wave 2 can go 99%, and curiously again Neely's view could have a near term top around 1200 in an unfolding ED/Terminal, so maybe it drops and EWI gets confident again.

[Wave Rust]

neo sue,

whats wrong with this picture?

you have been shorting the whole time i was long. i'm in cash as of an hour ago. i took a sizeable profit. i will short any move off the highs. probably where you will add your last addon.

if you copied everything i have posted here the last few days, removed my name from it, then distilled it and tried to use it, you might not have to take these unnecessary drawdowns.

Everything i posted, I learned from books, friends, traders and common sense lessons. Not one bit is original, except for how I applied it to my risk management plan.

So, it wud not be you copying somebody, you would have to apply it to your game.

fwiw, your risk is now at roughly spx 1202 to 1220 before a turn down.

why trade against the obvious trend? Even though I have done it, I still can't answer that question.

wave rust

[Wave Rust]

yelnick,

"Theoretically a wave 2 can go 99%"

but a B wave can over 100% of A :) that is, if April to August was an A, then the indices are still in a 2 ,,,, my guess is intermediate degree 2 of P1 up.

Duncan, is my bullishness getting boring yet? not trying to be a broken record.

wave rust

[cory]

MHD wrote: "And the sad fact is Bob P. never seems to learn."

He's learned very well! The lesson? He will always have suckers buying his wares if he hews to the catastrophe line. There will always be people with anxiety problems who enjoy scaring themselves and pretending they are just being prudent. Whether the markets crash or rise is irrelevant... it's the horrible thrill of worry disguised as "Elliott Waves" that feeds Bob's family.

[Neo Tzu]

wave crust....your ankle biting doesnt provide any new market information or anything I dont already know.

I'm willing to play rodeo poker here...

http://www.youtube.com/watch?v=GjQWp7LaWrU

It's traders game now ,,,, channel traders, swing traders, and scalpers. Then again, the S&P could shift ranges to trading between the low 900's and 1050 for awhile.

wave rust

Posted by: Wave Rust | Sunday, September 12, 2010 at 09:05 PM

[Mamma Boom Boom]

>low volume with rising price, early in a new bull market is highly desirable.<

Now stop that. I nearly spilled my Dew.

[yelnick]

wave, your bullishness is great! Since the yelnick point is all forecasters get hoist by their own BS, we need bulls and bears alike in the comments. bears have taken a beating, soon it will be the bulls turn.

Looking back at the waves, it is easier to say April to July was a corrective wave down, and the waves since have been 1-2-3 of something; or ABC. If the ABC is a wave B of a larger pattern, we have a C to go. This would be a large flat, and there is no specific rule on where an irregular B can go. Curiously the closest fractal is the 2000-2007 period, where the flash crash and large bounce is like 2000-2002; and then we would be in the big bubble B wave like 2003-2007. Both our ABC off July and the 2004-07 market were driven by Fed policy.

[Neo Tzu]

bears have taken a beating

There are no bears left, they've all turned bullish or are bankrupt.

Except for this guy....this bear on youtube has to be the most persistent arrogant bear I've ever seen....

Must watch!
http://www.youtube.com/watch?v=ZqgdDTBn8SE

[Wave Rust]

yelnick

good points, for sure.

like '07 to '09, or the flash crash, steep drops need big mops to clean up the mess.

hard to say where and when the first moves off big lows start and end.

my bias is bullish long term, especially because oblahblah has another 2 years. oblahblah and the repubs in charge of at least one house, is good. gridlock is bullish.

wave rust

[Neo Tzu]

Go back through this bears archive

http://www.youtube.com/user/PSAadmin

The guy NEVER gives up lol

[yelnick]

wave, history says the market should go up into the 2012 elections .. Prechter's 7.25 yr cycle (66 - 74 - 80 - 87 - 94 - 00 - 07) is rising into 2012 .. QE says we should trash the buck and watch all markets rise in dollar terms into 2012.

[TigerPaw]

BREAKING NEWS!

Mass UFO sightings in NYC today, on CNN, on Twitter:

http://twitter.com/search?q=ufo%20nyc

Gold/Silver/Food/Protection

[Roger D.]

Looks like we have a double top or a marginal new high in the Dow due in the next 5-10 days depending how BIDU finishes it's final 5th wave up.

Roger D.

http://www.screencast.com/users/fast996/folders/Default/media/d64da8b6-8778-49a9-a92f-f10b3ddc2257

[Manav]

Looks like EWI's 5 would need to be recast as a 3 very soon...unless the market reverses pronto....its funny how 3's and 5's can swap identities almost at will...

[Pat Riley Operator #136]

You should have seen the headline over at CNBC today. What commodity is hot? How about the whole sector. Very cover storyish type indicator. Meanwhile SP is putting in the old hockey stick formation.

[Pat Riley Operator #136]

Waiting for AAII poll release. Expecting 60% bull 5% bear reading LOL!!!!

[Zendo]

Given this blog is about financial markets analysis and EW, and is now talking about 3D TV, that itself is a bullish call...as all the speculation about a potential top is in base on EW counts is just another fruitless exercise.

Maybe counting EW using a 3D TV will probably see a top comes in? ;)

A possible scenario,

1. Market will keep going higher and make new high all the way to 2012
2. Gold keep going to the roof and over $3000
3. Treasury yield will blast through 2% and head for 1% range
4. Dollar index go below 30
5. Any pullback will be celebrated by bearish EW practioner and then the market bounce back immediately and keep going higher.

The Fed and the rest of the world is going to print debase their currency, EW or even any technical analysis is not going to work. Just keep buying any dip and hopefully you can protect your real purchasing power.

[Zendo]

Although most people think QE 2 is more or less discounted, but still, its going to pump a few trillion dollars into the system over next 12 months.... what will gold be like? what will usd be like? We got a mad scientist (Ben) at helm of the FED and a country who cannot take the pain and correct their mistakes... rather they prefer to see their children become poor in next 20 years.

[options trading]

It is sad to see the dollar lose it's value day by day... but this is a begining of many opportunities as well.

[BeatTheSP500]

Pondering the inevitable destruction of the $USD...

Who is fooling whom?
"It is with sheer disbelief, and utter amazement that the real world accepts such an empty unit of exchange to start with. To fathom a plausible reason for such collective behavior, one need not go any further than...

http://elliottwavetechnology.blogspot.com/2010/10/usd-by-joe-russo-elliott-wave.html