Sunday Evening Post

Good Evening Capitalists,

If you've come here this evening seeking the "Truth" about the world and financial markets, then this is not the blog thread for you. You should rather turn your attention the World's ultimate "Seeker of the Truth" here.*

I've been out the last two weekends on various family vacations and so it took me a lot of time to get reacquainted with some of these charts and patterns. The bulk of the analysis was spent on the Dollar because I think, in many ways, it's the most important market and it's the market where more of my risk capital is "tied up."

When last we looked at the DXY it was at 81.59, and I had admitted to doubling my stake in the DXY, from 20-40% of a max. position. The index ultimately went lower (80.08), but it has been a decent "double down." The focus of this report is on the wave count and where short/medium term support might lie. The Bottom Line is this:

The DXY chart looks constructive. It appears headed in higher in the short, medium and longer term. There is near term support in the 82.50-82.54 area. It might make sense to buy any weakness to start the week and use 82.50 as a "stop." It seems like a decent risk/reward setup as one will know they're wrong fairly quickly.

Note: S&P 500 thoughts are coming shortly, but the report is not yet finished.

DXY Update 22 Aug 10

I know it's going to seem like a "cop out," but my wave count remains unchanged from the last several weeks. I don't think we have "the big one" down coming just yet, but the recent action is a bit ominous. My preferred case calls for several more weeks of congestive action before the "plunge-a-rooski." That stated, the "Big Picture" is that we put in a top at 1220 and the risk/reward remains to the downside. Unlike on April 25th however, when we were geared "max short" with S&P puts, the same downside "reward" doesn't seem to exist. At least not yet anyway. Therefore, we remain just 20% of a maximum short.

"Short term" resistance on the S&P futures resides at 1085. The most bearish count suggests an "imminent" collapse, so a decent risk/reward trade might be to short the S&P futures with a stop just above 1085. As with the DXY suggestion above, one will know very soon if it was a bad trade or a good one.

SP500 Update 22 Aug 10

* I think BR is a great Blogger. He gets his mitts on some grip analysis and interesting articles. However, that missive had a "jump the shark" feel to it: "The broader mission of what I try to do is seek the Truth." Ugh.