16 August
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01 Today's EarlyBird Report – 16 August
Market Drivers
Dow Jones Cash 11,482 +1.90%
Base Metals steady
US Gold CFD: 1765
Oil WTI CFD: 87.80
Copper CFD: 403
US Dollar CFD: 73.92
EURUSD 1.4450
AUDUSD 1.05
Dow Jones CFD 11,468
S&P500 CFD: 1,200
FTSE 100 CFD: 5390
SPI CFD 4300
US News -
U.S. stocks advanced Monday, wiping out last week's losses, as corporate deal making helped send blue chips to their first three-day winning streak in six weeks.
The Dow Jones Industrial Average finished 213.88 points higher, or 1.90%, to 11482.90, closing near session highs for a third straight advance. The last three-day string of gains for the blue-chip Dow ended July 1. Markets have grown increasingly volatile in recent weeks amid worries of an economic slowdown and debt problems in the U.S. and Europe.
The Standard & Poor's 500-stock index ended with a 25.68-point gain, or 2.18%, at 1204.49, led by the utility and energy sectors. The technology-oriented Nasdaq Composite gained 47.22 points, or 1.88%, to 2555.20. All three indexes wiped out their losses from last week.
Motorola Mobility soared 56%, leading the S&P 500, after Google agreed to acquire the company for about $12.5 billion in cash. The move was seen helping Google compete more directly with Apple in the competitive mobile-communications industry. It also gives Google a trove of coveted mobile-device patents. Google's shares lost 1.2%.
Commodities
US Gold CFD: 1765
The rally target off 1700 is the 61.8% retracement at 1780 and expect the 1772 and the 1780 (SG2) to at least create a short term top, after this short term top if the market finds support on 1172 then it can push higher to retest 1800.
The target to the downside around the 1650 is still on the cards, however I would also like to stay with the pattern at the 1800 as the Classic pattern at a level in this case the 1800 and that is when the price first reached the 1800 (the arrival) it was sold off (the reaction) looking for support (support) the current support at 23.6% 1720 is the minimum requirement for the retracement and is acceptable. If this is the support, then the next part in the process of the Classic pattern is the first high above the level, normally within SG1, in this case under the 1830, once this first high is in place then a larger ABC correction will take place above and more so below the 1800 (mTL8) MinorLevel.
So the first high above the level would be up in five waves (impulse wave), so count five waves from the 1720.
The flip side is that the move up at this stage can be corrective retracing to the 61.8% 1780 this would be in three wave abc, if it is an small abc to 1772 – 1780 then new lows would form in five waves down towards 1680 – 1650
So there is a small juncture we have to see the market unfold before we can make a clear decision, that is five or three waves up.
We are not missing out on anything here… if you were long the stop would need to be at 1737 and you would be trading to 1772, 1780 and 1797. The supply resistance is from 1772 to 1800.
Oil WTI CFD: 87.80
The support on 85 (mTL5) holds for the retest and moves with stock to the next MinorLevel target 88 (mTL8).
In the larger pattern this is a retest of the MediumLevel 90 (ML9) the price will push above 88 but expect a corrective pattern across mTL8.
The 88 and 90 is the 50 – 62% retracement levels, for a bullish count the price would need to prove itself and that would be finding solid support on 90, if this occurred the Dow would have support on 11500 and the SP500 on 1200 and the ASX200 on 4300 then we can consider long positions as a prospect.
Base Metals
US Spot Prices (24HR in l/b)
US Copper: Last: 4.03+
US Nickel: Last: 9.60+
US Zinc: Last: 0.98+
US Aluminium Last: 1.05-
Copper CFD: 403
From a trading point of view the MediumLevel ML4 / 400 is the line in the sand, the more support here the more potential for the upside, so support on 405 then 410 is would you’re looking for on the long side, any move under the 397 and the short is in play.
We have been taking of this current move up as a rally and we will stay with that until proven wrong in the analysis, however support is support and is part of the setup, if 105 becomes support then one small position long and I mean small as it can fail at 108 or 110, if the 110 finds support add the second small position. On the downside if the 398 is retested as resistance and fails you need to be short. This trading game is not about being right or wrong in the analysis, it’s about being on the right side of the closet largest number.
Forex
US Dollar CFD: 73.92
The last retest of 74.72 and the breaking through 7465 (SG2) and then the Midpoint 74.50 creates the short here, the next part in the process is the 74 becoming the resistance, the price will flicker around in a small fourth wave correction before moving down further, we can look towards 73, but understand the sublevel between 74 and 73, the sharp move down was a small wave three, so there a series of fourth and fifth waves to play out under the 7350 to 73, so what you see is not what you get in terms of structure, what you see from 75 to 7450 is what you will get.
EURUSD 1.4450
TradingLevels: The price should now create support above 144
Trade Strategy: If your long from 143, well done, if you’re going for the long term leave the stop under 143 until the 144 has been tested as the support. If you’re not long then wait for a pullback to check the strength on the trend, you may get lucky and we will see a quick test of 144, but you may have to use the support that will develop on 14450. If you are long look to add a small position anywhere here between 144 and 145
AUDUSD 1.05
TradingLevels: The 105 will see a correction and abc then a move higher
Elliott Wave: Counting the structure from the 101 on the 10th as an impulse wave should see a abc correction at 105 then a move to 106
Trade Strategy: The Robo did not get you short it kept you long, just be careful at 105 as a time consuming wave four may be about to unfold, but the target is the 61.8% at 106
Indices
Dow Jones CFD 11,468
TradingLevels: ok we are now reaching the MediumLevel 11500, just setting back a little to keep things in perspective. In the medium term view and that is working with the MediumLevel 11500, what this means is giving it room to move so we don’t jump to any wrong conclusions, the 11500 is the line in the sand to be long or short, however we do need to allow it time to develop as support or resistance. Firstly the upside, that is the first high above the level of 11500 is 11650, it’s from the 11650 that we are likely to see the main retest of 11500, it is this retest that we are interested in, will this retest fail to find support or will it find support, this is the basis for being long or short. This will be the same for the SP500 at 1200 and the ASX200 at 4300 and the AUDUSD at 105 this is the point that we trade from, we just need to wait to find out which way we are going.
Elliott Wave: Wave 4
Trade Strategy: If you have been long from 11300 to 1150 then great, however lighten up here at 11500 we should expect swings across this level. but the reality is the trend is up so stay long until proven otherwise, just reduce into 11500 until you have it as support
S&P500 CFD: 1,200
TradingLevels: The Wave for rally target is the 38.2% around the 1200. If support is found here like the Dow at 11500 then we have to look higher to 1260.
Trade Strategy: Waiting for the 1200 to show up as support or resistance, a move back under 1172 would be the short side. Regarding what occurring now, the price is edging higher, the 1200 will play a part, the 1230 SG1 is likely to create the first small first high above the 1200 level for the retest back onto 1200, its only after this process that we can work out if we are going to get the 1200 as support or resistance. Yes we are treating the move up as a rally, however if support is going to be found on 1200, then we would trade to the 61.8% level the 1260, which is turn would see our ASX200 at 4500
FTSE 100 CFD: 5390
TradingLevels: The resistance in terms of supply will thicken up between 5400 and 5500
Support on 5300 is a positive sign and would be long on support on top of a group1
Elliott Wave: The rally continues, however support on 5300 Minor Group1 (MG1) off the bullish element in trading terms for a minor degree trade to 5500 and support on 5500 would see further upside.
Trade Strategy: Much the same as the last post, scaling in on 5300 (MG1) and SubGroup1 (SG1) 5310 I 5320 I 5330 then the Midpoint. Scaling out through SG2 then waiting for the 5400 support and repeating the process through the Sub groups
SPI CFD 4300
TradingLevels: The 4300 (mTL3) a MinorLevel but also the top of Minor Group 1 this has significance, support here separates its self from the 4000, subtle but important to work with.
The Dow will also be working with 1150 and the SP500 1200 support on all these levels creates the trade up. We should also consider the process of pattern that can occur at a level, as of now the price has just arrived at all these levels on these indices. The two normal patterns are the ‘Overshoot’ and the ‘Classic patterns’
Trade Strategy: The SPI has reasonable support starting at the Midpoint 4250 then at SG2 2465 I 4272 I 4280, so any corrective pattern that occurs at 4300 will be looking for these supports under 4300. It’s normal to expect a corrective pattern at whole number and in this case the 4300 (mTL3) and the top of Minor Group1. The sublevel SG1 4310 I 4320 I 4330 are important and one would trade to 4330 and exit, wait for the top of subgroup1 4330 to becomes the retested support and move back in and trade to the midpoint.
It’s a good idea to also observe the Dow Futures. The Shanghai will have subtle resistance at 2650 but more at the 2700 to 2720 this is a key area to observe and use as support or resistance, support here would see the price at 2800 for the Shanghai, the other one to watch is the copper market, support on 405 is a start but support on 410 is part of the driving element of strength
Summary
The leading markets are the AUDUSD, SPI, Shenzhen, with the Dollar Index breaking to the low side and the Euro to the upside this further supports the current rally in indices.
Indices - What we have been waiting for is support or resistance at certain price points.The support we are waiting for with the Dow is at 11500; the SP500 at 1200; and the ASX200 at 4300. All of these markets are close to, or have arrived at these levels, but it’s not enough for them to simply touch these numbers, they need to play out at these levels and that can take some time. This playing out is what we are going to be talking about over the days ahead. There are two basic patterns that play out at the price levels, the Overshoot and the Classic, they're explained in »Online Videos (see videos 5 & 6 towards the end of the article on the link page) if you want to get the concept.
We are still considering the moves up as rallies and we need them to reach their targets as mentioned above and then play out their patterns at these levels, ending up as support or resistance so we will trade long or short from that situation. This playing out of patterns simply takes time and a lot of emotion comes and goes so this is why we pick out certain markets and hedge our bets with small positions and generally keep busy in a positive proactive manner.
We have long and short trades open in the markets and we are waiting for the medium term picture to offer the markets as support or resistance, that’s the bottom line. And, it may take another three days to sort out; for the Dow we were looking at 13 days down so 5 or 8 days as a ratio rally is about right.
PS Check For ASX Ex Dividend & Reporting Dates.
Quote for Traders
"A poor chess player can still make a remarkable move." - Wang Yinggui
Today's Financial Events
Time Currency Detail Forecast Previous
11:30am AUD Monetary Policy Meeting Minutes
12:00pm CNY CB Leading Index m/m 0.5%
4:00pm EUR German Prelim GDP q/q 0.5% 1.5%
6:30pm GBP CPI y/y 4.3% 4.2%
6:30pm GBP RPI y/y 5.0% 5.0%
6:30pm GBP Core CPI y/y 3.1% 2.8%
6:30pm GBP DCLG HPI y/y 0.9% -1.6%
7:00pm EUR Flash GDP q/q 0.3% 0.8%
7:00pm EUR Trade Balance 0.3B -0.6B
Tentative GBP BOE Inflation Letter
10:30pm CAD Manufacturing Sales m/m -0.3% -0.8%
10:30pm USD Building Permits 0.61M 0.62M
10:30pm USD Housing Starts 0.60M 0.63M
10:30pm USD Import Prices m/m 0.0% -0.5%
11:15pm USD Capacity Utilization Rate 77.0% 76.7%
11:15pm USD Industrial Production m/m 0.5% 0.2%
Tentative USD Loan Officer Survey
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 International Commodity: ElliottWave count for GOLD
GOLD 30 Minute Chart
Monday, 15 August 2011 at 6:00:00PM AEST
Gold found the support on Friday at 1720 low from where prices recovered for around $25. As such, we came out with an updated count that is still pointing lower after a five wave of decline from 1813 pick. But before new leg lower occurs, test of 1765 region is still possible.
1720 break opens the door to 1700 and even 1680.
GOLD 4 Hour Chart
Monday, 15 August 2011 at 5:10:00PM AEST – wave 3 top?
No change! On gold we were monitoring bullish price action within wave 3 for some time now, which may have already found a top in the past week. If that's the case, then watch our for even deeper and more complex pull-back, as we look for a larger wave 4 decline. Reversal possible even into the base channel support zone.
*Break above 1814 will put 1840 in play, when we would look for even more extended wave 3.
GOLD Daily Chart
14 August 2011 – bullish trend remains in play
Gold reached a new all-time high in this past week, above $1800 per ounce from where we saw almost $100 sell-off till the end of the week. Well, based on the wave structure and substructure (4h chart) of a parabolic rise we would really not be surprised to see further weakness in the coming days, but only temporary as we look for a wave 4 pull-back.
For those who want to join this rally should wait on the solid corrective pull-back first! Now it could be too late.
GOLD Weekly Chart
16 July 2011 – gold uptrend fully in progress within wave III, now eyeing 1750
Gold remains in up-trending mode as price closed at new all-time highs this past week, which puts even higher levels in play, around 1750 as Fibonacci extension level suggests. We still believe however, that commodity is trading in final stages of a third wave, and that temporary highs will be established once this year.
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