Let’s face it, we had a tough week. We lost three cultural icons, two on the same day and a new rising star. In their own right, each may have been the best of all time in their field. First you have Ed McMahon, who may have been the greatest straight man in the history of comedy. Then you had Farrah Fawcett who may have had the greatest selling poster in the history of posters and finally the King of Pop. For those of us who grew up with them, I think we lost something we can never get back. As I’m writing this, the news of Billy Mays came over the wire. I always watched his commercials as here was a master of his craft. I know we are diverging from our usual business, but rarely have we ever had a week where we lost so many beloved people in public life.
In markets we have something big brewing as well. At Thursday’s high, the Greenback starting showing elements of a completed pattern which would be an intermediate level 4th wave triangle. It came to support on Friday and held, but is holding very tenuously. A break of the triple low and you can kiss the pattern good bye. Whichever way it ends up, this is a fairly decent size triangle.
By far, that is the most important condition to watch this week.
Here are a few others. For my subscribers, I put out a chart of Copper which traced out a very complex high. I’m not going to say pivots can’t be taken out because if that were the case we would be in a perpetual trading range and we know that’s not true. But let’s just say it would take a very powerful leg to take out the recent high on the copper chart. I think the dollar and copper may go hand in hand. One man’s rubbish may be another one’s fortune. Copper had been challenging the 61% retracement of its drop at the 62-hour mark. It was able to negate 62 hours but not 62%. The jury is still out as to whether this is the strong leg that can challenge the high or not.
The next one is the BTK which has calculations which suggest it could run into trouble this week. If you noticed the biotech has been leading again but all it was able to do was run back into resistance. It has a small degree square that could trigger an immediate pullback but larger forces may stall it out by the end of the week. As it stands right now continued bullish action in the SOX and BKX are extremely questionable. My readings are consistent with further sideways action. This is the end of the quarter and usually a bullish seasonal period. Some of my readings are suggesting the bounces that we’ve seen the last few days in semis and banks are of smaller degree. That doesn’t mean we sell off, it just means we are going to labor to get much higher. If it weren’t for the seasonal factor, I’d think we can sell off this week.
But then again the dollar is in serious trouble right here. On the surface one would think the inverse relationship would continue with the stock market but I’m thinking that is going to apply more to commodity stocks than tech or banks. While we are on the subject of commodities, our metals symmetry of 161 at June 16-18 turned out to be a dud. But not all was lost. As it turns out, the continuation chart of sugar inverted and bottomed exactly in the 161 day window on June 17.
Getting back to tech, on Tuesday the NDX flipped polarity as it more or less held the May 6 pivot high with slight overlap. What that is telling us is we have a market that doesn’t want to go down but may not be ready to go back up. It held the 50-dma which means the trend isn’t in force or strong enough to stay with the 20-dma. What that means is the longer term trend is still in force but in the shorter term an overall weakening. Everything I’m seeing up to this point is consistent with a sideways market. We want to see certain conditions support other conditions. So when we flip polarity to hold support and we come to a seasonal bullish period, probabilities rise you won’t see a sell off to start the week. That being said, we do have to realize charts like the BTK are bumping into serious resistance.
As of late Sunday night, the dollar was making a stand, whether it turns out to be Custer’s Last Stand should be determined on Monday. The dominoes will fall into place. You’ve read my take on the dollar for weeks, now its time to let the market do what it will do.
Finally our newsletters and coaching programs are teaching people have to get a very definitive edge in trading all markets. In July, our tutorial will be digging even one level deeper. On Saturday, our Futures update, which will be up all week alerted subscribers to a set up in one commodity that is poised and likely in the early stages of an important move. It’s the kind of work we do on a regular basis. In May, on this same chart we already outlined its last real important move. Which one is it? It’s only a click away at www.lucaswaveinternational.com.
Next week is the big holiday weekend and I’ll have an abbreviated column. The regular column will resume in 2 weeks.
