SPX to Mop up Wave 2 Retracement
Stock-Markets / Stock Markets 2016 Dec 15, 2016 - 02:51 PM GMT
The SPX Premarket is lower, but hasn’t broken yesterday’s low as I write. That leaves the possibility of a second go at the trendline at the open.
ZeroHedge reports, “This morning the world awakes to a landscape in which markets are frantically rushing to catch up to a suddenly hawkish Fed which not only hiked for the second time in a decade but, as per yesterday's Fed statement and Yellen press conference, realized it has been behind the curve all along, and the result has been a spike in the dollar across virtually all currency pairs with the USDJPY surging above 118.40, coupled with a jump in bond yields around the globe as bond (the US 10 Year is trading at 2.64%, the highest since September 2014) as traders dump any hint of duration.”
TNX appears to be completing an expanded Wave [b]. B waves are known to be rogues occasionally and this is no exception. This expanded wave may simply be attributed to a knee-jerk reaction to the Fed announcement or it may even be due to Quadruple Witching, where options and futures all come due in the last month of the quarter.
We also see an expanded Wave [B] at a larger scale in the USD.
USD futures are higher this morning and appear to be challenging the Broadening Wedge trendline.
It appears to be a classic case of “buy the rumor, sell the news,” coupled with options expiration. The Dollar longs appear determined to be paid today. However, the chart tells us that the support for the USD may disappear momentarily.
Gold continues to decline this morning to a new low at 1127.00. Gold has overshot its standard “point 6” reversal, which usually stops at about 3-4% beneath “point 4” at 1201.50. In doing so, it appears that the Wave [c] of 4 was suppressed. This would have been the bounce that I had called for last week. Today may indeed be the Master Cycle low for Wave 5.
Crude Oil is also in decline as it approaches its next level of support at 48.60. It appears that Crude may continue to decline for yet another week. Don’t be surprised if it bottoms at or near the cycle Bottom support at 39.15.
Regards,
Tony
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