Dow, Germany, WTIC Oil 11-16-2012

DOW and Global Markets have corrected/dropped for 1.5months already, the typical for a good correction. Dow also lost 9% already in the past 6 weeks time. In case that this is just a correction, we can conclude that supports are at 12500 for possible uptrend support, and the 61.8% retracement is on place. The RSi and current Wave a = Wave c correction structure also concludes that this could be the bottom.

Although in Elliot Wave terms, int. ii must not go below the minor I of int i, we can still take this scenario as a bullish one, unless it goes below 12035 level. Current count is still as bullish state, and ongoing int. ii of Major Wave 3 of this Primary Wave III bull market.

Short Term: RSI overbought, and MACD as low as 12035 low. Positive Divergence on Daily charts, and possible uptrend support, 61.8% retracement level.

Medium Term: Possibly bottom soon.

Long Term: Uptrend

Germany was not so bad at all, only corrected 6.2% for the entire frame, and the selloff was gradual. It expanded 0.2 or 0.3% QoQ and still having a slow but sure growth, UK and France GDP just inched higher as well, but European GDP contracted and entered 2^nd recession since 2009,due to 25% unemployment of Spain and Greece, plus low GDP of Portugal and other areas.

We don’t see any support for Germany, and Global Markets doesn’t depend on Germany anymore, seems that Fiscal Cliffs drags US Equities in particular, as the effect is for US based companies. Although we may see lots of indicators that US equity is currently a good entry point, Germany may have broke its slow downtrend support. We are looking to a support near 6900. And Medium Term uptrend support at 6400.

Short Term: Correction isn’t as sync with US. Sideways to Down, possibly just broke down a major support.

Medium Term: Sideways to Up

Long Term: Sideways

Oil prices was one of my leading indicator that Equities are bound to correct. US and Europe made its new high last end Sept,but Oil sold off immediately up to 5% instantaneously. Although Equities and Oil doesn’t 100% go in tandem,this is one of the few indicators to guide the next direction of the market.

Oil has a support at 85. And has Medium/Long term support at 80. RSI is now at OK levels, thus Equity rally /bounce can begin shortly.

All actions above are ideal for Technical Reasons, in case the Fiscal Cliff extended its range and increases tax scope, Fund Managers/individuals can do a quick sell-off that can trigger our must avoid levels.