Market Forecast for 10-01-12

S&P500: The US stock market index is trying to make a short-term low in the early AM in the States, as are the AUSSI, UK, DEC, STOXX, and the JP stock indexes.

While the SP500, AU, and DEC look more robust here, the STOXX and the JP stock indexes look more like they just completed an Elliott Wave 3 of a larger Wave (1) down, which would mean they may have one more quick low to complete Wave 5 of (1). If happens, it would then mean that the bear market in those indexes has restarted.

If the SP500, AU, and DEC happen to blast off for one more leg up, then that top would likely cap this move, as we have been suggesting based on the ED Interest Rate Futures contract COT report, skewed forward by 52 weeks, that portends a top within the the late September to October 14 time window (see earlier posts for this chart).

A break of the 2-day low would be very bearish for the US and European stock indexes. See the Standard & Poor's weekly, daily, and 4-hour charts below, as well as the STOXX50 daily, along with a complete graphical analysis.

sp500 stock index weekly chart with analysis

s&p500 daily graph

standard and poor's 240-minute chart

stoxx50 daily chart

EURAUD: We have a daily buy pending and a weekly sell on the Euro-Aussie pair. Therefore, we will suggest you place both orders:

ACTION 1: BUY (daily charts) @ 1.2427 stop to open, use 1.2356 stop loss, move to breakeven @ 1.2475, exit half the position @ 1.2513 limit, exit the other half @ 1.2625 limit and/or trail stop loss to an exit.

ACTION 2: SELL (weekly charts) @ 1.2325 stop to open, use 1.2382 stop loss, move to breakeven @ 1.2270, exit half the position @ 1.2180 limit, exit the other half @ 1.2010 limit and/or trail stop loss to an exit (see weekly and daily graphs below).

euro-aussie weekly chart with forecast

euraud daily chart

EURUSD: The Euro is looking like a cross between all of the stock patterns mentioned above. The daily Super-Trend (solid purple mid-line) has been pointing down since one day after the exact high (that was sweet!) while the CYAN longer-term stop & reverse signal is still long on the daily chart and could go long any minute on the 240 minute chart.

Either way, we would perfer to see an initial rally on the 240 and then a pullback before recommending a several day long position.

ACTION 1: Consider a several day long position should the Euro take out 1.2960, then pullback on the 60-240 minute charts. Buy the intra-day short-term pullbacks unless or until Action 2, below occurs.

ACTION 2: If tonights low of 1.28024 is broken, sell the breakout, and expect lower prices into the 1.2615 area (see daily and 240-minute Euro charts with complete analysis below).

euro daily chart

eurusd 240 minute chart

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