MCD Mcdonald's

I have been looking at the symmetrical triangle in MCD McDonald's chart. The chart is weekly. I can count 5 segments inside the triangle.

MCD can be a safe haven in case of market bearishness and vice versa can benefit from weak dollar since it has huge international exposure. Looks a win-win situation for an upside breakout. If it breaks to the upside, the triangle target is $78.

EUR/USD

EUR/USD lost 46 pips (from 1.4746 to 1.46) and is again bouncing from 1.47.
Taking profits and will wait for higher prices!

Momentum divergence in EUR / USD currency pair

EUR/USD pair seems to be showing Bearish Divergence.
See how the RSI is oversold at the same level as Sep 21 but the price is quite lower. It indicates that EUR/USD will print lower from here.

Sell it.

US Fixed Income prices

The Bull's cage (or pen) has been rattled and the so called plunge is seemingly here. But is it really?

Friday was an intra-day reversal. But does it mean that the Bear market rally is over. Some Bears do believe that and there is plenty of evidence in the weakening breadth and exhausting momentum that now is the time to see a big "Correction" or perhaps a big roll over.

I am looking at the US 10 Year Note Yields for clues to the direction of Equity markets.

Here are two charts, a 5 year weekly and a daily chart of the US 10 year note yields. Keep in mind that yields move inverse to prices. The weekly charts tells us that yields did bottom in Dec 08 and prices topped. The yields have been and are still an uptrend. Since the Equities lag Fixed Income, they also bottomed in Mar 09 and have been rallying.

Looking at the daily chart, I see that the uptrend since Dec 08 is pausing. My Elliott Wave count is given in Green. As per the primary count, we are currently in Wave 4 of the impulsive advance that began Dec 08.

On 10-2-09, the yields fell through an important support at 3.27 level but the drop was reversed 50%. The crucial point is 3.05. If that area is violated, the primary count will be negated (area of wave (i)). In that case, the alternate count marked in magenta will become the primary count. That count says that we are in a-b-c Zigzag correction.

Also, note that the drop has become sharp and the slope of successive resistance lines is becoming steeper.

I will be watching the 3.05 level very carefully. Its breach will confirm that happy days for Bears are here again. With the 3rd quarter earning season in the tow, it may well be the case.

But keep in mind that the primary count is still in vogue currently and that dictates a turnaround and yields topping 4.01 for the 10 year Note.

The break of downward sloping resistance trend line, shooting past 3.27 and break of higher resistance trend line will confirm that the yields will rise and so will the S&P 500!

USD

I got to add my conspiracy theory to the mix here! Otherwise life is not much fun.

The "surprise " strength in USD is going to bring the house of commodities tumbling down.

Sorry gold bugs, the time is not ripe as yet.

That in turn is going to bring the equities down.

That means we will have the plunge everyone and their granny is talking about.
And we shall live happily ever after that.

At that point, who would have thunk (well well well..) that the Buck will turn out to be Achilles Heal for the Bulls.

Dollar bottoms up

With all the doom and gloom about the "fiat" currency, US Dollar, it is hard not to get on the trash train and call out for an "alternate global currency". Well, now I know what "they" are smoking or they will need to when they awake from their self inflicted bold illusion.

Lets see the daily chart for US Dollar Index futures. It is obviously bearish for now but I am counting on to a bounce at $75.943 or so. Whether that bounce is just "another" upward correction or the reversal is yet to be seen. But I will dare to be bullish at that level until the market smacks me.

Why? I can count a 5 wave decline that is ending at $75.943 - $75.602. The lower target is achieved by counting by measuring from the real body of the candle. I am assuming here that wave (v) will be equal to wave (i). It the guideline of equality since wave (iii) is longer. Although wave (iii) is not shorter than 1.618 of wave (i). But still the structure looks fine.

Also, notice the jump in volume. Are the minority bulls finally throwing in the towel or it is accumulation? Jump in volume at price extreme is often a sign of price reversal.

BTW, where are the all the Fundamental Analysis folks that proclaimed that since US led the world to recession, US will lead it out! So why USD is so weak. Oh, the printing press theory. Well, it is happening all over the world, especially Europe. Why is cable so strong now?

That is why it pays not to put too much stock (sic) in the popular theories of cause and effect propagated by the Financial gurus.

75.943 is my level and I can count to 5!

Put Call Ratio

Equity Put Call Ratio (SMA) and Total P/C volume: CBOE data

This is CBOE Equity Put Call Ratio (PCR) and the total number of Calls and Puts. The PCR is smoothed by 10 & 20 period(day) Simple Moving Average (SMA). Going into the dip of Oct 2008, the volume of calls dropped while puts were "put on". The 10 SMA of PCR jumped.

The call activity increased in Jan 09 and again swooned in the middle of March.

Things have been going on pretty sideways for last few weeks. The PCR is at the lowest point of the data set. Meaning overall there is hardly any fear.

PCR is best used as a contrarian sentiment indicator but mostly gives the rear view.

Lets dig deeper into the latest time frame in the next chart.

Here we have 10/20 SMA of PCR along with S&P 500 closing price divided by 100 (SPX/100) on the right scale.

In the last three trading sessions the CBOE Equity data is as follows:

date--- Call volume--- Put Volume--- PCR

8/28--- 1794424--- 1007562--- 0.56

8/31--- 1280282---- 807063--- 0.63

9/1---- 1822353--- 1247665--- 0.68

Notice the jump in volume on 9-1-09. Also note that the PCR has not moved much even after a sell off on apparently good news.

Investors are not running for the exits and buying a whole lot more puts. Although VIX jumped since yesterday.

Does it mean that the investors are not taking this sell-off seriously?

That is what the PCR is telling today.

Lets keep an eye on Put volume in the next few sessions.