SPX, Gold and USD update

SPX

I am not sure about a return to the highs but we should get a decent oversold bounce. Perhaps the bounce will translate into one more leg up to 1160-1170 SPX, but it's entirely probable that we will top off at 1090-1100 on the SPX. I will let go of longs at around 1090.

USD

Edited at 4:30 p.m.. Change in outlook.

USD chart: http://tinyurl.com/2bltafk

I see a move to 82 being possible. In fact, that is my 1 month target, and is what I believe may bring the equity indices back up. ST, there should be a bounce or resistance fairly close to the 50 or 55 DMA, but that is still 50-100 pips away.

The devaluation of the dollar is the only thing that will bring up the U.S. indices.

I think that there is a 50% chance that the U.S. Indices will top off soon and fall to 910-950 SP500 (and in the mid 8000s in the Dow). The only thing I see that makes this unlikely is that every one and their mother is looking for this. When everyone expects something to happen (here I mean the completion of the H&S in the U.S. indices) it rarely happens. Even if the H&S is to complete, it is possible that it will violate to the upside the right shoulder, so as to run the stops on the shorts. Maybe it will climb to 1145-50? This would mean a move down to 82 in the USD.

EDITED 4:15 p.m.: The other probability is that the 50 DMA proves to be the springboard for new highs in the USD. The 50 and 200 DMA are indicating a LT bull market in the USD. This would mean a top around 1090-1100 on the SPX and 10300 on the Dow.

Gold

I am expecting 1325. GLD itself is the best way to long this. GDX and SLV are not great vehicles right now, IMHO.

Conclusions:

The ES fell roughly 68 points from 1129.5. It's been following fib ratios on this recent move. It could go up 32 (1094.5), 50 (1112.5), 68 (1129.5), 76 (1137.5) or 100 (1162.5) percent of the fall. Right now, I have little idea about how high this bounce will go, hence I would not deploy long-term funds. I am quite sure that we will get a bounce and if I had long-term funds in the market, I would be out at 1090 SPX, 1300 Gold.

Short-term

If my projections are correct, we should gap up on the equity indices on Monday, gap down on the USD, half fill the gap and then go to 1090-1100 ES before resistance, 84.5 or so on the USD, and 1.2460 - 1.250 or so on the EURUSD. There may be a short pause at those levels.

I plan to stay long the EURUSD until just short of 1.26 where I revaluate my thesis, based upon the reaction to 1.26.