Today’s Premarket shows us why there is always an alternate view of the Wave patterns. The decline to 2025.91 was too shallow and overlapping to be an impulse, although it could have been easily mistaken for one.

I have put in a “line in the sand” at 2084.87. The SPX rally may not stop precisely on it, but it may provide serious resistance to going much further.

ZeroHedge comments, “The single biggest event overnight was the PBOC's devaluation of the Yuan to the lowest since March 2011, setting the fixing at 6.5693, the highest in over 5 years and in direct response to a stronger dollar, which however if one looks at the DXY remains well below the recent highs in the 100 range, suggesting for China this is only just beginning.”

You may recall that China had been devaluing its Yen for about two weeks before the August 24 flash crash. The Yuan appears to be probing new lows which may add danger the risk-off scenario.

Jeff Gundlach comments, “In his latest contrarian comments to Reuters, Jeff Gundlach focused on the recent flipflopping by the Fed and its various speakers who are now positioning the market for an imminent rate hike despite the US economy still treading water, and said that while many Fed officials are "dying to raise rates," but all that matters is Janet Yellen's opinion, a glimpse of which we will get as soon as this Friday when she speaks at Harvard. "All that matters is Yellen. She is still there."

Instead of showing VIX this morning, I have decided to show VXX, ,which is approaching its Master Cycle low (VIX is not). Today is day 251 of the current Master Cycle, so I suspect that the decline may last through the end of the week. It has a technical support at 13.79 that may bring this decline to a close even sooner, should the decline continue at this pace.

USD nudged a little higher this morning, but appears ready for its next decline. The Cycles Model suggests a decline through the month of June to reach its targeted low at 90.50.

While the euro is declining precipitously, the Yen is still in its rising trading channel. It appears that there may be some confusion in the currency markets until the USD finds its final support.

Gold reached a new low of 1220.50 this morning, but as I had previously commented, it is due for a Master Cycle low by Friday. We may see a bounce at any time, since today is day 257 of the current Master Cycle.

There may be a better short entry in the next 2-3 weeks.

Regards,

Tony

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