Squawk Evening Update: News Tomorrow

Who knows if tomorrow will be the day that markets start making news, but they will be receiving jobless claims, a third revision to second quarter GDP, and Chicago PMI data.  Perhaps something in one of those releases will be enough to get markets picking a move one way or the other.

[click image to enlarge]

This morning we talked about the possibility of an equity top at Tuesday’s high and about the importance of the DJIA 1932 FibGrid snow line.  Again the DJIA spiked above the snow line briefly today, only quickly retreat below.  It stayed beneath yesterday’s high, thereby maintaining the possibility that the high is in.  However, neither the price levels achieved nor any visible wave action is sufficient to confirm or refute any change in trend.   So with sloppy wave action off the high supportive of bullish and bearish counts, we will continue to wait.  That will likely leave us without much more to say about the current count in equities beyond what was in this morning’s briefing.  We will focus on what signs of confirmation we might look for if a move materializes.

The Euro, on the other hand, did proceed to make a new corrective high.  The momentum divergence we looked at this morning still exists in all timeframes and still supports a turn from near current levels.  In the morning we’ll have an updated count and look to see if we can shed some light on the situation with an updated wave count that reflects overnight trading.  One thing that we did notice is that the new highs seem to be obeying a trendline (especially if it’s drawn with a thick line); that will have us looking to see if we can’t find a possible ending diagonal in the Euro.

One last note on the Euro concerns the time ratios we presented in Monday’s briefing.  We went back and recalculated the dates using hourly charts to eliminate rounding any rounding error.  This now shows that the upward correction will have lasted 61.8% of the time taken for the decline Thursday at 10:00am.   Looking at the two upward legs of the correction, (W) and (Y), (Y) will be 61.8% of the duration of (W) on Thursday at 10:00pm.  As we mentioned on Monday, time ratios do not carry as much predictive power as price ratios.  However, the proximity of these two values at least warrants some attention.  We should give time ratios some leeway, so even if they do tell us when to expect a turn, it could be in at today’s high, or still a few days away.