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Thursday, March 3, 2011

Elliott Wave Update ~ 3 March 2011 [Update 7:30PM]

[Update 7:30PM: Dollar and 30 year yield counts.

On the dollar I seen this article today, "Why the Dollar's Reign is Near an End" in the WSJ:

So we have some definite mainstream bearishness being displayed.  And this only comes usually near the end of a trend when the trend seems "safe" enough to do so.  The article even goes on to say that it will no longer be used as a "flight to safety". (Is this opinion only based on the recent price action of late?  Is this writer actually extrapolating the recent 300 point DOW decline and imagining a 3000 point decline will invoke no flight to the dollar? Sheesh, he is confident of the down dollar trend!)

The whole article is pretty much bunk if you ask me and the only reason for its existence is a vehicle to express bearish sentiment on the dollar. Its written by an Economics professor of course.

Mish pretty much addresses the dollar's safe  reserve status here in this post

And Mish's conclusions are dead on. The dollar cannot possibly lose reserve status because of simple math alone. America is a gargantuan economy and until that changes, of which it isn't anytime soon, the dollar will always be the 800 pound gorilla.

Even the WSJ article provides this graph with the article which directly disputes the thesis presented in the article!
That graph alone ensures reserve currency status.  Simple math.

But when sentiment gets in the way, we tend to ignore the math and express our sentiment. Kind of like the HUGE debt problem.  We don't "feel" that the debt is a problem so we don't act and nothing gets done. But simple math will always win out. And the market is all about imposing the math sooner or later. If not sooner, then later. But in the span of a lifetime or three, this 25-35 year "crazy days" will seem like just that:  Crazy. But since we are living it, we cannot find the forest because the trees are so tall.

But math always wins.

Now on to the current dollar count: getting to my $76.11 target.
30 year yield:
[Update 6:59PM: FTSE shows an apparent triangle ready to pounce to new highs. What is odd that it just does not fit into any good count at the moment.  This is an example of what I was talking about last night. Everyone sees the triangle and it looks near perfect. However in the overall count, one could also expect triangle failure cause we already made a "5". I guess we'll see how it pans out.

Stronger internals today than last Friday. Coupled together, you would assume stocks will easily make a new high above 1344 in a matter of days. And so be it. But taken together, as impressive as it all was, market internals were nowhere near "kickoff strength" of September 1st or even early December.

So one might surmise that the market is giving it all its got. Every time the NYAD cumulative line hits the main trendline, Captain Kirk calls the engine room demanding warp speed and Scotty responding "We ain't got much dilithium crystal left Cap'm, but I think we can get 'er home".

The wave structure is a bit muddled. We have what looks like 5 waves down from peak, so thats what we'll go with until proven otherwise.

I will say though if we get new highs I am very excited about approaching the (C) = .618(A) mark at 1352 SPX and 14350 Wilshire 5000. Thats a nice ratio and the bigger picture is not lost on me.

And we still have 20 SPX points until we even reach that point should the market eventually get there.
Those are weird looking waves. 

NYAD new high today. But of course.
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