Friday, August 13, 2010

Harmony and Chaos = Volatility

S&P 500
The chart below shows the harmonics that lead to the August 9th peak.

  • The cycles shown were some of the components of the projected August 8-10th Energy Date. ( 1.272 = 1/.786 : where .786 = the sq rt of .618)
  • The 50% retracement of the May 24th low suggests that 1040.78 was the conventional wave 1 low which price projections should be calculated from.
  • If the 21 day ema (1103.07) crosses back under the 55 day ema (1101.15), it would substantiate that the 1129.24 peak on August 9th was in fact the top of Wave 2--which suggests that a violent wave three is dead ahead.

Volatility is looking like it is in the process of breaking out. Volatility typical increases during declines. Long VIX strategies may prove to be very timely at this juncture.

Gold is rallying nicely--breaking to a new recovery high. This gives traders a opportunity to adjust trade management parameters.

U.S. Dollar
More on the Dollar this weekend.

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