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February 26, 2012

Ending Moves

The action over the last week saw large strides taken toward the scenario described in my previous post, calling for a lower dollar along with panic buys in stocks and commodities. The U.S. Dollar index slumped over a point, falling beneath the early February low and forming a failed daily cycle. Failed cycles are the hallmark of bearish trends and... as detailed in the Member Letter... the current bear trend in the dollar should produce more weakness.

DX Daily

The dollar slump saw gold rise to a new high for the rally out of the December low. Gold very often sees its sharpest gains as price moves into an intermediate-degree peak, so its move could take the form of a true panic buy.

Gold Daily

When discussing panic buys, one need look no further than crude oil. In my February 14 post, I noted how a recent breakout by oil early in a daily cycle could lead to a huge price manifestation.

Oil Daily

Oil is likely to test... or perhaps even exceed... its 2011 high at $115 as the dollar seeks an interim low.

We can find another impending breakout on the copper chart.

Copper Weekly

Based on copper's recent action, a breakout could induce a thrust to overhead pivots in the $4.50-4.60 area by the end of March.

Finally, the equity market is showing signs of wear, but I continue to believe the SPX will push through the 2011 high in order to trigger buy stops and allow the big boys to distribute ahead of a larger correction.

SPX Daily

Sentiment suggests the environment is ripening for a larger correction, but neither cycles nor internals suggest the moment of inflection is upon us, yet.

 

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