FYI | Nov 09 2010
By Rudi Filapek-Vandyck
Is that a positive outlook for US equities? ATW's Jerry Simmons explains why the DJIA could be on its way to 12,000 and potentially even beyond.
Today's video broadcast was originally reported to traders at ATW on November 04. Total duration of the broadcast, titled "AUDUSD-5w; FXI-5w; SPX; NDX; NG" is 49 minutes.
Summary:
00:00-11:00 min: In this 49 minute video, Jerry Simmons, Senior Mentor and Co-Founder of the ATW Advanced Trading Workshop USA, first provides a further update (11 min) on his analysis of the AUDUSD currency pair first presented on 25th October 2010.
11:00-18:40 min: This is followed by a 7’40’’ comment on the structure of the FXI, the well-known single country ETF covering the 25 major Chinese stocks of the FTSE/Xinhua Index and something of an equivalent to the US Dow Jones Industrials, except that the DJIA covers 30 major US stocks.
18:40-26:30 min: Comments on the Natural Gas market
26:30-27:30 min: S&P – re-testing the April high, divergence to other markets developing
27:30-end NADSAQ, Russell 2000, Dow Jones Industrial
Comments:
AUDUSD:
• The AUDUSD has arrived right at the maximum penetration point (1.01344). This is defined as the area between the DAlt (red) and DAlt-X (magenta) when a DAlt is constructed off the most recent major low. The DAlt-X represents a 38.2% expansion off the DAlt. The ATW teaches that the DAlt-X represents the maximum penetration point. If the price exceeds that maximum point, the Double Top is invalidated and a new wave has started; an up wave in this case.
• Jerry Simmons describes the AUDUSD pair as a leading indicator for many markets, especially several metals, but even the S&P500.
• The AUDUSD pair formed a low in late May/early June 2009, the S&P500 followed in July 2009. In August 2009 the AUSUSD formed a second and higher low; the S&P500 did the same in August, but the AUDUSD 2nd low was much higher than the corresponding low in the S&P500, forming a bullish divergence of the AUDUSD over the S&P and forecasting a bull move in the S&P, which then duly followed.
• Generally, the analysis concludes that the AUDUSD is showing signs of exhaustion. We are in wave 5 of a 5-wave move, which has subdivided into a 2nd degree 5-w move within wave 5 and possibly even a 3rd degree 5-w move within that subdivision, all classical signs of price exhaustion.
FXI:
• The same structure as in the AUDUSD can be found in the FXI, the well-known single-country ETF comprising the top 25 Chinese stocks that can be held by foreigners and something of an equivalent to the 30 top US stocks DJIA.
• Signs of exhaustion can be found in the FXI as well. An Exhaustion Fib and the DF51 constructed shows 49.00-49.20 to be the minimum completion target for the FXI’s own 5-w move with the price band 53 – 54 being the ideal target.
Natural Gas:
• Jerry Simmons concludes that there is support at the 3.740 – 3.840 price level. The 5-w move of natural gas to the downside appears to have been completed. Now, a break-out above the 3.790 price level is required to confirm a reversal from the lows to the upside. At the same time, such a break-out above 3.790 would confirm the double bottom as valid in natural gas.
S&P500:
• The S&P500 is re-testing the April high.
NASDAQ, Russell2000 and DJIA:
• Interestingly, there is major divergence developing between the S&P500 and the NASDAQ. The S&P500 has only just moved into the 1200 area. But the S&P500 2007 high was almost 1600, so the S&P500 has a long way to go to get to that high. However the NASDAQ is almost back to the 2007 high. Either there is bullish divergence in the NASDAQ over the S&P500, or there is bearish divergence of the S&P500 over the NASDAQ. We need to take into account, however, that much of the recent up move in the NASDAQ is due to the meteoric rise of the Apple share price.
• Either of these two scenarios could unfold; we are unable at the moment to conclusively say which one will develop. However, it is noteworthy that the NASDAQ is showing solid support right under the current price levels at 1970-2070. A break below 1900 would be required to do serious damage to the NASDAQ and the bullish divergence case.
• The Russell looks more like the S&P, i.e. also exhibits a degree of bearish divergence against the NASDAQ. It is at the 61.8% RTC (retracement) of the major down move following the 2007 high. The last intermediate high before the current one was a 78.6% RTC of the major down move following the 2007 high.
• The well-established November-January seasonal pattern explained in the 2010-11-03 Strategic Prep video could take the DJIA at least to 12,000.
To view the ATW Strategic Prep Video (originally from November 3, 2010) titled "AUDUSD-5w; FXI-5w; SPX; NDX; NG" click HERE or visit the FNArena Investors Education section of the website.
All views expressed are Jeremy Simmons's, not FNArena's (see our disclaimer).
Jerry Simmons has over 25 years of full-time trading experience. He is the senior partner and head mentor for the “Masters” Programme within the education system at New York based Advanced Trading Workshop (ATW). ATW recently set up shop in Australia through the establishment of ATW Australia.
FNArena is pleased to have Jerry Simmons as a highly valued contributor to its service which aims at both educating investors and assisting them with their own market analyses.
The above mentioned video has been added to the FNArena Investor Education section at https://www.fnarena.com/index2.cfm?type=dsp_minc_education)
The direct link to the video behind today's story is:
https://www.fnarena.com/index4.cfm?type=dsp_minc_video&p=12
About ATW Australia
Founded in June 2010, ATW Australia is a “one-stop-shop for all a trader needs to succeed”: quality education for new traders, superb advanced trading education, fast unfiltered data, a world-leading trading platform, customer oriented competitive brokerage, quality ‘Made in the USA’ specialized trading computers, trading magazines, and the all-important psychological mentoring and coaching for traders. The trading educational products are provided by the Advanced Trading Workshop, Inc. in New York, all other services are provided by a network of partners that were chosen based on their superior products and services in their specific field of expertise. FNArena is one such partner.
To learn more visit www.advancedtradingworkshop.com.au.
