Market Summary

I use Elliott Wave analysis to study the markets and as I noted here on April 25 the day before the top we were in a weekly 5th wave pattern and I would be looking for either 1) an A-B-C correction pattern to follow the 5th wave top which is a 3 wave consolidation patten, or 2) a reversal 5 wave count pattern to the downside. This is the decision that has to be made as I understand Elliott Wave. If we count the May 6 flash crash as wave 1 or wave A and the bounce back higher on May 13 as wave 2 or wave B, then we could be in either 1) wave 3 which is the strongest wave in whichever direction it is pointing. A wave 3 to the downside would take us below the February lows. Or 2) wave C which would be the low from which we go to a new wave count to the upside. While I am an optimist and hope that Friday was a C-wave low which way the markets decide to go we will just have to wait and see. Sentiment is very bearish. Overhead resistance is in the area of former support the 110-111 gap noted on the chart. Click on image to enlarge.

For the YTD period the US Dollar is up the most up 8.99% just off its best levels and a good time to be in cash. With credit contracting we have deflationary pressures that raise the value of money. It is followed by GLD and the small cap index which was doing the best and which remains just barely positive for the year. The EEM is down -12.57% for the year, the darling ETF last year, as China puts the breaks on its economy. The underdog for the year remains the UNG natural gas index. For the week all markets were down with the US Dollar down the least and the small cap index, oil, and gas down the most. Click on table to enlarge.