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Tuesday, November 17, 2015

Elliott Wave Update ~ 17 November 2015

Short term count is anyone's guess.
Medium term suggests some possibilities.
Oil near term is anyone's guess. We got the big move correct but the next few months could continue to be whippy. Technically, I don't see anything tipping us off to a clear direction medium term.
Gold big news is an ending diagonal triangle count. This infers that gold is in for a huge liftoff after the completion of wave (5)
USD. Worked off overbought and now poised for a wave five up.

But perhaps the most important chart is whats going on with short term rates. As you may know I am an advocate that high interest short term rates will absolutely crush the financial/corporate system. Why? Because unlike the late 1970's early 80's, there won't be a "stagflation" but instead a likely deflation coupled with high interest rates. This in my opinion is a deadly combination. I never imagined short term rates would be distorted so low for so long but they have been. However, technically rates are poised for a big breakout move.
And the Fed follows the market, they do not set them.  The 3 month yield is the highest it has been in 5 years and that is significant. I estimate that the Fed will have to hike rates by at least an 1/8 point if the 3 month yield moves toward .25.  They will be "muddled" if it hovers around .15 - .22 by the time of December's rate hike decision.  In any case, the Fed may hold off one more rate hike decision based on where the 3 month yield is in a few weeks, but the market is going to force their hand sooner or later because the 6 month count is pointing up.

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