XLF at critical level

Yellin: "Not massively overvalued."

Ah, the last time a Fed governor commented on the equity markets was 1996 when Uncle Alan Greenspan warned of "irrational exuberance." But we continued for another 4 years before the crash, and Al continued the easy money to get us there.

"Not massively overvalued" and Rosie is "Not massively obnoxious."

EURUSD acting bearish

which means strong dollar, which means...

stocks go down.

easy concept; watched by *everyone*.

No other chart necessary.

All about the dollar

With the UUP burping last week, the technical analysis is messed up. Now we are looking at EurUSD. This shows it coming back to trend support and it may fall thru, but there is massive support in the 1.495 level. And weakness in the EurUSD should be short-lived.

SPY: Bullish vs Bearish?

We've had 5 up days after falling below the 50-d MA and the general upward trend from March has been respected. The case can be made for a bearish scenario as well as a further bullish move.

Bullish indicators: SPY is still above the 50-d MA. The trend is upward with a higher low made last week. The previous uptrends were 7-9 days and we are currently on day 5 of this one.

Bearish case: The uptrend is decelerating as evidenced by negative divergence on MACD histogram. SPY is now below the 20-d MA. Today we continued the uptrend with a higher high and IF this is a right shoulder of a bearish H/S, then we need to have a red bar or two.

SPY: Bullish Wolfe Wave?

This is what keeps bears up at night: the appearance of a suspicious Wolfe Wave bullish pattern. I still remain net short, but this warrants close observation.

SPY: Falling through support

Let's look at the longer view on the weekly. Last week was a big red pepperoni and this looks like a subtle warning ala Mamis. Strength in the US dollar was required for such a move lower in the stock market, so we continue to watch the DXY to stay above $76.00 and preferably $76.30.

The chart is necessarily busy and shows Elliot wave 5 resolving the motive with last week's high. Also, both Fibonacci price retracements and time extensions are depicted. Eighteen weeks passed from the March low to the July low. The July low resolved upward after the fake out a-b-c reversal. November 13 will be exactly 18 weeks from the July lows, so following the Fib time extension, this should be a significant date.

In July, the pullback was less than 38% and this pullback should be in that neighborhood if we follow Fibonacci rules. That would give us a target of about $95 on November 13th, which sounds like an aggressive pullback. We'll see.

The dotted red trend line is from the March lows as is the solid red trend line.