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Trading Any Market

USD Nearing its Target

Stock-Markets / Financial Markets 2018 Jan 25, 2018 - 02:36 PM GMT

By: Anthony_Cherniawski

Stock-Markets

Good Morning!

USD futures are still trending lower, although some are calling for a bottom here. The morning low at 88.62 came awfully close to the Orthodox Broadening Top target that I have highlighted for nearly a year.

One wouldn’t be blamed for taking short profits here. However, even as the risk of a reversal rises, the Cycles Model suggests that it still has a week, if not more, of decline ahead. In addition, Wave (5) reaches 1.5 X Wave (1) at 88.16 and 1.618 X at 87.60.


ZeroHedge observes, “Another day, another rout in the USD index, with the Bloomberg dollar index sliding for the 4th consecutive day to the lowest level since December 2014 after Asian participants were able to react to yesterday’s comments from US Treasury Secretary Mnuchin, which he refused to deny in follow up Davos commentary on Thursday.

With the dollar tumbling, the EUR hit a new three year high ahead of the ECB's policy decision this morning (full preview here) before stabilizing around 1.24 as investors wait to see if ECB President Draghi can stem its advance later today when explaining the central bank’s rate decision.”

SPX futures are higher this morning. There may be a Wave (v) of [v] heading for 2863.00 – 2876.00. That would fulfill the Primary Cycle Fib relationship at 2865.00 mentioned yesterday plus two lesser degree internal relationships within Waves (v) and [v].

The next Master Cycle turn is due on Wednesday, January 31. This all-time high already counts as an inversion, which suggests the end of the uptrend. That leaves two possible tracks for the SPX decline. The normal track would be an 8.6 to 12.9 day decline of 8 – 16%. The Wave (4) low target for Wave (1) is at 2417.35, nearly a 16% decline from 2865.00. The alternate is a 43-60 day decline that may wipe out all gains since 2011.

David Stockman comments, “You could say thank heavens they have finally stopped buying the "dip". Then again, there apparently aren't any left!

That's the case, anyway, even if your notion of a "dip" is any day the market doesn't go up. So far there has been exactly one such occasion during 2018. Or worse still, if you assume the traditional metric of at least a 5% drop, you have already been out of the dip buying business for a lifetime---- whether measured in market lives or even dog years.

That's right. Heisenberg reminds us this morning that we are in undisputable record territory. It has been fully 395 trading days since the market had a5% drop, and that's never happened before in all of recorded history.”

VIX futures are modestly lower this morning. Not much to say here until a breakout…then all hell breaks loose.

TNX is still hovering near the high this morning. Its Cyclical period of strength is about to run out, possibly by the weekend. A probable retracement to Intermediate-term support at 24.41 is likely, then a final burst higher to the Wave (5) top. The Head & Shoulders pattern is weak, but can be useful. The last time I used the H&S formation at a Wave 3, it fell short of its target.

Here is a weekly view which calls for a final probe to or above the weekly Cycle Top at 27.65. The Orthodox Broadening Bottom calls for point 6 to arrive at or near 27.80. Wave (50has already broken above Wave (3), so it appears to be highly likely that it will finish higher.

You may have read last night’s commentary on WTI. Well, the WTI futures reached 66.66 in overnight trading, fulfilling the 50% retracement of the decline ending in February 2016.

Nuff said.

Regards,

Tony

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Anthony M. Cherniawski, President and CIO http://www.thepracticalinvestor.com

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals.

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

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