thursday thanksgiving trading, page-140

Sarala, hi again. Yes. In a nut shell they see a bit more upside in the US markets before completing wave 4. They have 11 different corrective patterns! They yhink the current rally should carry toward at least the Fibonacci .382 retracement of wave (3). In the S&P this level is 1008 and in the Dow it’s 9622. Both of these levels happen to closely coincide with a small open chart gap left at the close of trading on November 4 (1005 in the S&P and 9625 in the Dow).

The CBOE put/call ratio has rapidly dropped, likely reflecting a surge of call buying relative to put buying.

However unlikely, a break of 768 in the S&P and 7700 in the DJIA would suggest that greater bearish forces were currently in control of the market’s trend.

he U.S. Dollar Index completed a fifth-wave ending diagonal pattern, wave (5), at last Friday’s 88.46 high. The index should be in a decline that will draw it to the origin of the diagonal pattern, which is the previous wave (4) low of 83.10 (Oct. 30), at the least. Wave (A) likely bottomed yesterday at 84.71. Wave (B) up is underway and should top somewhere beneath 88.46, maybe in the 86.43-87.03 area. Thereafter, wave (C) down should draw prices toward the October 30 low, or lower. Only a rise above last Friday’s high would suggest some other pattern was unfolding, possibly with much greater near-term bullish potential.

Gold still remains a bit shy of $837, the .618 retracement of the decline from the October 10 high ($933.45). Whether or not gold reaches this level, or even pushes toward $880, the .786 retracement, they view the current rise from October 24 ($680.75) as a countertrend move. Why? Because there remains only five overlapping waves down from the March peak. Five waves do not constitute a completed countertrend move, and this assumes that gold will rally strongly thereafter. It’s entirely possible that there is even greater bearish potential after prices reach the $600-$650 target range. Coming under $750 should be a deep enough decline to eliminate any remaining near-term bullish possibilities and signal that the next leg lower is underway.