Wednesday, June 1, 2011

Market Timing Update (6/1/11)

[EOD] Stocks, Bonds and the Dollar-

Stocks - a potential 7 wave corrective structure
Looking away from squiggle counts for today's sell-off, we now have 7 waves down from the May high in stocks (Chart 1). The fact that the May lows are still holding for many indexes may not be as important, as this leg of sell-off may be wave 7 (see below) of a larger corrective structure. Note that INDU broke its May low and made a lower low today.

The first hint of a potential 7-wave structure is the QE Fractal (5/27/11). Chart 2 updates. Within this framework, the near term low is either the end of wave 7 or the initial wave decline of wave 7, the latter scenario being effectively the same as the more bearish count for the foreseeable future.

The second hint is the squiggle count itself, which is more clearly seen in ES. It's likely that a five wave decline from the overnight high is complete, see Chart 3.

Bonds -
Bonds are likely approaching the end of a multi-month ABC upward correction. Effectively, retracement targets have been met (Chart 4).

The Dollar Index -
DX may have either completed a downward expanded flat correction OR the initial decline from the recent high to complete a large ED. See Chart 5. Today's low is thus important. In either direction, we need follow-through.

[215pm] SPX squiggles and QE fractal-
Please see QE Fractal Projection (5/27/11) for context on the larger count and QE fractal.
[1045am] SPX squiggles -
see the 2nd chart below
[830am] Overnight update (ES) -