Most in the EW community think that we are in a big new dollar bull and that this is just wave 1 of it. While the data will have its say in the end, it will help not to be surprised by outcomes that are outside of one's universe of belief. So if UUP peaks and then does an a-b-c back to the level of the prior 4th or to the 38.2 fib or to the 50 fib or even the 61.8 fib then I will gladly accept the data for what it is. I will be the first one to say "the dollar rally is real". But I will not be blinded or blind sided by the data if this turns out to be the C wave of a larger formation whose next move after the coming UUP peak will be to sweep the dollar down and skyrocket metals and miners, especially the juniors and especially the leveraged ETFs.
I don't know how long it will take to print that final 5th wave but if it is the same length as 1 of 5 then it will be as long as the vertical blue bar. So it should take 1 to 5 more days to complete. It really mattes how hard 3 of 5 gaps up. I wonder if they will tie the coming reversal to some remark having to do with the federal reserve from the new GOP controlled senate. Let's face it: the dollar is a con and if a con is threatened with things like audits or scrutiny, the odds makers have to devalue it. Maybe it will be some official position appointment that signals tougher times ahead for the fed to run their game. This article discusses several possibilities along this line. So let's look back at this post in a week or so to figure out if the chart somehow had a priori knowledge that something deemed significant by the herd is going to happen.
The JNUG model (see below) is also playing out as documented in this post. I did not expect the secondary break out of the top rail but I should have seen it coming since my rising wedge indicator should have suggested to me that it was only 3 of C and not 5 of C. So in any case, we got a nice throw over on the E of 4 wave. Then we got 5 waves down to within spitting distance of the lower rail. That could technically be the end of the wedge if this is going to be a short stroke 5th but I doubt it. I think it will come down quickly below that lower rail, perhaps even with a gap to just below it in order to send clear word to the herd that wave 3 of 5 is playing out.
If the above plays out then it probably means that the $COMPX and DJIA get a small boost as well, and perhaps there will be more selling in TVIX which I could see going as low as the $2.34 to $2.25 range for one final volatility shorting fest. The lower they take it, the higher the percentage gains will be when it finally breaks loose. Also, the longer they wait before letting it rise, the higher it will have to travel in order to just kiss the top rail. But if this is a large 4th wave expanding wedge then it will throw over the top rail during the E wave. Again, we know that the data shows that volatility has been kept down via retail investor shorting. When it begins to turn on them they will cut and run and this thing will rise quickly, probably with a visiable a-b-c pattern which, if it happens, will be our first validation that this model is correct.
2 comments:
Things have been brewing on the other side of the ocean too. First, it was Germany recalling its gold and then reversing itself, though the German people still wants it back. Now, it's a Swiss vote in a couple of weeks to recall it's gold too. If the former made central bankers sweat, the latter, enforced by law, might make them jump... off the window sill. The timing of the heard is uncanny and, like a flock of birds, distant parts of it seem to veer in the same direction at the same time.
Yeah I saw that. The gold reserves being held FBO others in the US are no different than the goldsmiths of the 1600s holding village gold in their vaults and getting receipts for the gold. At some point, those markers began to trade instead of the gold because the markers (notes) were more convenient. Over time, the banker noticed that few people would withdraw their gold and thus their markers just floated around in the economy. So the greed goldsmith created fake, counterfeit markers and began to spend them into the economy. At some point, the marks and patsies decided to come get their gold from Goldsmith (a run on the bank) only to find that he did not have enough gold to cover all the markers floating around in the economy. This was when the people would take Goldsmith into the street for some mob justice.
This is exactly what is happening now and we the USA should not be surprised if, upon finding out the dirty truth, that Mark and Patsy foreign nation are pissed about it. Such a revelation could completely destabilize the global balance of power.
By the way (tangent alert), I wrote in the post that "That could technically be the end of the wedge if this is going to be a short stroke 5th but I doubt it.". I should have followed up with "but if it breaks out the top rail then we will know that my gut feeling was likely wrong and that the rise of M+M has begun".
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