BarroMetrics Views: The Markets At Cross-Roads?
On Wednesday we saw a strong down on the US$ Index (DX). The individual currencies, especially the GBPUSD, EURUSD and AUDUSD all reflected US$ weakness.
In my weekly video and Forum articles, I had taken the view that if my DX Ray Wave Count was correct, then we needed to see two consecutive days strong down.
We saw the first day down on Tuesday; but yesterday we saw the DX have an inside day rather than another strong day down. More importantly, we saw the S&P provide a 1-day Horizontal Terminal within a possible 18-day Upthrust Change in Trend Pattern. (We need to see a bearish conviction bar below 1092 (basis cash) to trigger the pattern.
The S&P patterns coupled with the DX slowing of downside momentum is providing amber warning lights that we may not see an Xmas rally in the US Stock Market. If the correlation holds and we see a rally in the DX, then the S&P, Crude shall fall.
What about Gold? Well it is certainly in a parabolic move up. I for one would be tightening stops to below 1130.0 (basis Feb), the most recent reaction low.
We have Non-Farm Payrolls and I am looking for -120,000 to -130,000, outside the consensus at the moment but I am not sure whether that expectation is outside the range of expectations. I’ll know by Friday.
My feeling is if we are to see an upside move on the US$, it will be accompanied by a downside move on stocks. Crude will move down; I am not sure about Gold. Now is the time for traders to be careful and protect profits and capital.
(In the S&P charts, I have drawn linear regression bands one to three standard deviations; I have marked the beginning and end of the linear regression bands).
FIGURE 1 Ray Wave DX
FIGURE 2 S&P 18-day Barros Swing
FIGURE 3 S&P 1-day Barros Swing
FIGURE 4 Crude Oil (QM)
FIGURE 5 Gold
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