11 October
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01 Today's EarlyBird Report – 11 October
Market Drivers
Dow Jones – 11,433 +2.79%
Base Metals Positive
US Gold CFD: 1670
Oil WTI CFD: 85.66
Copper CFD: 337
US Dollar CFD: 77.83
EURUSD 1.3657
AUDUSD 1.00
Dow Jones CFD 11,400
FTSE 100 CFD: 5400
SPI CFD 4250
US News
NEW YORK (Dow Jones)--U.S. stocks rose sharply as investors cheered a pledge from France and Germany to resolve the euro zone's banking and sovereign-debt troubles.
The Dow Jones Industrial Average rose 278 points, or 2.5%, to 11381. All 30 Dow components rose, with bank stocks leading the charge higher. Bank of America climbed 4.7% and J.P. Morgan Chase advanced 4.3%. The gains came after the blue-chip index managed a 190-point rally last week.
The Standard & Poor's 500-stock index gained 34 points, or 2.9%, to 1189. Each of the index's 10 sectors traded in positive territory, with energy, financial and material stocks posting the biggest gains. The technology-heavy Nasdaq Composite surged 76 points, or 3.1%, to 2555.
Commodities
US Gold CFD: 1670
Expect a retest back to 1650, that also five swings now across this level and a five wave pattern normally represents a triangle pattern, so the pattern can now be completed, confirmation would be if it traded back under 1650 and found it as resistance, then we can short it from there. On the long side if the 1672 and 1680 which are part of SG2 become support then trade up close to 1700 and exit. It was interesting to see Silver stay under its last intraday high, this helps confirm the larger triangle correction in Gold
Oil WTI CFD: 85.66
Oil will push higher in line with Indices and 11,500 for the Dow is a very important level, so this can take oil anywhere up to 90.
Base Metals
US Spot Prices (in l/b)
US US Copper: Last: 3.38+
US Nickel: Last: 8.69+
US Zinc: Last: 0.87+
US Aluminium Last: 1.00+
Copper CFD: 337
If we take the move up in line with the Dow then the 340 to 350 would be about right for the pattern, the abc correction for wave (iv).
Forex
US Dollar CFD: 77.83
The larger correction is unfolding from the 80 as we see the Euro surge up from its six week low, we should expect the Dollar in the 77 to 76.50 range in line with Indices, such as the Dow running into 11,500.
From a trading point of view you need to work with a retest back into 78 and the 77.72 is the key price point to work with.
EURUSD 1.3657
TradingLevels: Seeing the first reaction from 137, the reaction move down is in five waves so we can expect and abc corrective pattern before pushing higher. 138 The 137 and 138 are the last two highs so resistance will be there
Wave count: A move above 137 helps confirm the Oct low as the low of the six weeks down trend, this would also line up with the five Minor waves down making Intermediate Wave (1) in the Indices? The 61.8% retracement for the Euro is at 140, but the 138 holds the first levels of supply and the 50% retracement level, roughly, the 13772 would be the timing element
Trade Strategy: The weekly Short trade has now been stopped out 1.3533, that was a good six week trend and we could see over the last few weeks of the trend slowing down as it bounced into its lows and I’m only guessing that the Oct low is the low for the time being, as the current move up would need to display a larger five wave structure and yes it certainly helps if the old highs are taken out at 137 and 138, the current wave structure up would suggest, but the Dow at 11500 and the SP500 at 1200 will play a part in hold the markets.
AUDUSD 1.00
TradingLevels: Expect a reaction at 1.00 (TL1)
Wave count: Five waves up from the last low around 94 to 1.00 this five waves would be wave (i) or wave (a) of an (a) (b) (c) correction, more likely the abc.
Trade Strategy: Look for a move to 98 in due course, this would only be a corrective move of wave (b) in three waves. On an intraday basis a push above 1.00 can occur first to complete the smaller five wave structure from 9735 low, try and count the series of five waves up from there.
Indices
Dow Jones CFD 11,400
TradingLevels: A move to 11500 (MediumLevel) and reaction back to 11400 or 11300 then a move to 11650 as the possible top, the top can also be at 11500 this topping can take until next Monday Tuesday.
Wave count: Still working with the Impulse wave up (five wave structure)
Trade Strategy: No strategy, just use the sublevels between each 100 points.
S&P500 CFD: 1,188
TradingLevels: While the price stays above the 1120 the market is positive, yes it can come back and retest 1144 – 1128 and we should see a larger correction at SG2 1172 zone
Wave count: I am counting the five waves up in the SP slightly different to the Dow, the SP can be counted with its fives waves up to 1200.
Trade Strategy: Reaction into 1200.
FTSE 100 CFD: 5400
TradingLevels: With 5300 as support you would be naturally long, exiting at 5400, and if 5400 develops as support then trade it to 4472 as the 4500 will have large orders waiting there.
Wave count: The five waves up are getting close to completing, but can take the price to 5500.
Trade Strategy: wait for correction at 5400 then look for support on 5400 scaling in through SG1. (SubGroup1 - »TradingLevels FastTrack Intro).
SPI CFD 4250
TradingLevels: The SPO and ASX200 should push higher to 4300
Wave count: Still counting the five wave structure up.
Trade Strategy: Trading the Sublevels long.
Summary
The Markets still have a further upside: the ASX 200 to 4300; the Dow to 11500; and the AUD above 1.00. However once these levels are reached its only natural to consider a corrective pattern.
The weekly cycle would see Wednesday close or Thursday open the high. There is another cycle that may see next Monday/Tuesday as the high. So any long positions you have should be fine for the time being.
Trading Quote
"Not accepting a failure is to not learn from it."
Today's Financial Events
Time Currency Detail Forecast Previous
10:50am JPY Current Account 0.51T 0.75T
11:30am AUD NAB Business Confidence -8
11th-15th CNY New Loans 551B 549B
11th-15th CNY M2 Money Supply y/y 14.1% 13.5%
4:00pm JPY BOJ Monthly Report
4:00pm JPY Economy Watchers Sentiment 46.9 47.3
4:00pm JPY Household Confidence 37.4 37.0
6:30pm EUR ECB President Trichet Speaks
7:30pm GBP Manufacturing Production m/m -0.1% 0.1%
7:30pm GBP DCLG HPI y/y 2.3% -1.5%
7:30pm GBP Industrial Production m/m -0.2% -0.2%
11:15pm CAD Housing Starts 187K 185K
1:00am GBP NIESR GDP Estimate 0.2%
1:00am USD IBD/TIPP Economic Optimism 43.2 39.9
NOTES:
1. Check the Dividend & Reporting section for your stock on this site before trading
2. Prices may change as this report is written while markets are closing/trading
3. Always think things out for yourself, we are only here to bounce ideas around.
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02 FOREX: ElliottWave count for AUDUSD
AUDUSD 1 Hour Chart
Tuesday, 11 October 2011 at 5:45:00AM AEST
AUDUSD moved nicely higher since our European update, when we noted that pair may reach 0.9980 resistance level. So actual wave count did not change, we still expect a near-term top in wave A that will send price lower, into a corrective wave B. For now however, we still do not see any signs of a wave A top, so extension even higher is also possible.
*Only an impulsive fall, back into the wave (iv) territory will suggest that top is in.
AUDUSD 4 Hour Chart
Monday, 10 October 2011 at 5:32:00PM AEST - temporary low in place
AUSDUSD extended the recovery from 0.9390 region, where we believe that temporary bottom was established. The reason is an impulsive rise through the black trend line, after the bounce from the wave 5=1 equality region. As such, pair is now moving into a higher recovery, which must be structured by three legs, (a)-(b)-(c).
If we are on the right track, then pair may recover even up to 1.0000-1.0200 region, while 0.9390 low is in place!
At the moment, wave A is still in progress, but most likely near resistance; previous wave 4.
AUDUSD DailyChart
9 October 2011 - wave two pull-back
AUDUSD was trading sharply lower in the past few weeks, and formed a very nice, clean impulsive fall from 1.0760 area. Well, a bounce seen in the past week from 0.9837 has an impulsive shape, so we think that pair reversed into a corrective recovery; likely wave 2) as shown on the chart.
Corrective waves are structured by 3-legs minimum, so more sideways to come, before we may continue to look lower, even below 0.9000.
Larger trend remains bearish, as long as 1.0760 hold!
AUDUSD Weekly Chart
25 September 2011 - bearish trend, weakness to come!
AUDUSD broke through and closed below a very important support line connected from 2009, which is the most important evidence of a change in trend. As such, the updated wave count suggests that a five wave recovery from 0.6 is complete and that prices are headed much lower, now into wave 4 territory.
We also have a bearish divergence on the MCAD, and a break below zero line will be just another downtrend confirmation!
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