Stocks Float Higher; Euro Struggling

I'm not posting any stock charts tonight.  EWP has not been accurate in forecasting stocks the past several weeks and some people have expressed anger and great frustration with EWP and me, and judging by the hate mail I've been getting I think most of them simply look at the charts and don't read what I say.  So I'm going to only post words for stocks tonight.  This anger and frustration some people are feeling is usually because they are new to trading and fail to understand that no analysis is 100% accurate all the time, and it's up to the trader to determine when the probabilities, along with risk/reward ratios, are in their favor to determine when a trade is worth making.  Professional and successful traders don't have to always have a trade in place, and don't have to always know which direction the market is going.  Trading is about probabilities and risk/reward ratios, and when they're in your favor then you trade, when they're not in your favor you stay away.  Right now, EWP is not in our favor for stocks, so I'm staying away until a nice reversal pattern forms.  EWP's accuracy for stocks will return, and I'll continue to make money on swing trades when it does.

Now EWP and basic technical analysis has been much more accurate with the euro lately so that's why I've been actively trading it and am currently short right now.  The euro has declined impulsively from its high at 1.3485, and so I will bearish until price goes above that level.

There are two wave count options I see for the euro right now.  The first is posted above where wave ((i)) has completed and it is about to undergo wave (c) rally within a "flat" correction for wave ((ii)).  The story here overall is still bearish, it's only in the very short term I have to expect a sharp wave (c) rally to around the 1.3200 level before it tops and reverses.

The other option is that wave ((ii)) has already completed, and a big strong wave ((iii)) down is now underway.  If correct, the euro will not hestitate to shoot lower this week.  If correct, this is a move I don't want to miss, so I have sell stops in place to catch a break out to the downside.  Utlimately risk is capped for the bears at 1.3485.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

Stock Decline Looks Corrective; Euro Finishing its Own Correction

Internals today continue to support the bigger bearish picture in that volume is not supporting the rally and therefore the rally has no legs over the long haul.  However, in the short term, the wave structure indicates a new high is probably coming before a major reversal occurs.  Volume declined again to 715 million NYSE shares on a rally move today which is far less than the 876 million shares that accompanied the decline earlier in the week.  Unfortunately for the bears though, 876 million is still a small number overall.  I'd like to see volume break 1 billion to gain confidence in future direction.  Most likely that type of volume will occur on a huge down day in price.

Which Method Can Traders Use to Confirm an Elliott Wave Count?

Although I'm short now and am looking aggressively for shorting opportunities only, I can't overlook the fact that from an EWP perspective, the recent decline looks like a 3 wave drop which is a correction.  No worries though, it was probably just one of the fakeouts I mentioned would probably occcur as a major top forms.  Patience rules the day.  Once I notice a high confidence reversal pattern is in place, I'll mention it here.  Until then, I'm waiting to add short.

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The euro is probably correcting in a wave (iv) as I labeled above.  If correct, it needs to fall almost immediately because wave (iv) is getting a bit stretched relative to wave (ii).  Prolonged rallying probably means I have this mislabeled, but the alternate counts are still very bearish.  Bottom line, look for the euro to continue lower soon. 

Who's Going to be President? Ask the Stock Market.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

Today's Weakness is a Good Opportunity for the Bears; Euro Trend is Firmly Down

Today's reversal was decent from a bearish perspective since the decline is unfolding impulsively after the market internals and momentum are beyond stretched and tired.  This suggests more downside is to come.  Also, down volume was 95.7% of total volume on the NYSE today, so it was all selling all the way today.  Looks like a lot of profit taking of people who have done well on the recent rally and want to reduce risk here at these levels.  So all it takes today or tomorrow is a small fear jolt and this delicate market will crumble as those who didn't exit yet but are thinking about it, will rush for the exits and take profits at the next sign of trouble.  Total volume increased by 25% today compared to yesterday, which is good for the bears, but overall it's still a very light number so let's not do a cartwheel just yet.  I doubt a major top like the one labled in EWP below will occur this easily, so be prepared for some fakeouts and disappointments.  Always manage risk assuming you're wrong whenever you place a trade.

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In addition to total volume being a bit light for such a major top perhaps forming, another piece of evidence isn't exactly very bearish.  You can see that today's decline is sitting right on an ascending trendline established from late last year.  The market may bounce from that trendline tomorrow, but ultimately it should crash below it and open the door to the possibility of heavy selling.  A nice close beneath this trendline in an impulsive structure would be a great sign that top is in.  I shorted small already since the risk/reward is so favorable here, and because I've been on the sidelines for so long.  But I will pile on the short side more and more as the evidence mounts that a top is in fact in place.

R.N. Elliott Discovered the Wave Principle Over 70 Years Ago

The euro followed the wave count I put up yesterday as it continued lower it what is probably a wave v within wave (iii).  As long as the euro continues following the basis of this wave count I will continue to use it and trade with it.  3rd waves tend to do whatever they want, and they often extend, especially within their 5th wave which the euro is in right now.  I'm holding short, expecting lower levels for the euro in the days ahead.

Who's Going to be President? Ask the Stock Market.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

Still Waiting For Stocks to Make Tradeable Move; Euro Has Opportunities

Nothing has changed from my post, charts and the wave count remain static.  I'm still waiting for a reversal pattern and impulsive move to the downside so I can establish a position.  I've been on the sidelines for weeks now, simply waiting.  Volume continues to be light with today barely breaking above 700 million NYSE shares.  Tough to trade with volume like that, unless you're a daytrader which I am not.  One of many signs that this rally has no legs is that volume has left a long time ago.  The next move of consequence to provide traders a good solid opportunity should be to the downside.  But we have to wait until the market is ready.  But I'm on high alert....looking for signs of a reversal, knowing that many others are doing the same so there will probably be a fake out or two to the downside before the real heavy selling gets underway.  So as always, I'll be managing risk appropriately and looking for a shorting opportunity.

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The bottom line is that the euro appears to be falling impulsively.  Being so early in the decline makes it hard to determine the degrees of trend with high confidence, but the subdivisions of the move is undoubtedly impulsive nonetheless.  So the path of least resistance for now is down.  The euro should not exceed 1.3485 in the near future, so shorting with stops just above that level seems like a good opportunity to me, especially if a big rally occurs from current levels which would allow me to short at a better price.

Who's Going to be President? Ask the Stock Market.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

New Highs Slap Wavers....AGAIN; Euro Correction Looking Clearer

I haven't posted anything in a while because there was nothing new to add from my last post.  The market has continued the slow grind higher with no clear signals to establish a tradable position in my view.  But this week the S&P confirmed the Dow's new high, which is a significant event, and therefore the reason I'm writing today.  The major bearish setup was that the Dow made a new high while the S&P did not, so any sharp downturn would be a great signal for the bears to jump in short for what could have been a major selloff.  But that setup was negated with the new high.  It means again, wavers were wrong in calling Primary wave ((2)) complete, and again we have to look higher and continue stretching out the count.  It has been tiresome and frustrating to say the least.

Although I have not taken a position for quite some time since I thought the best move was to get short when opportunities arose.  But the fact that I missed this long gring higher frustrates me.  Again, I find myself standing on the sidelines with no position, simply waiting for an opportunity to get short.  It won't be easy at this point.  I expect volatility to pick up when a top starts forming, and most likely at least one fakeout will occur.  So I'll remain disciplined and keep risk tight when trying to catch a top and short this market.  But for now, it's a waiting game.

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The euro's correction seems a little more clear now.  It's completing a Minor A-B-C corrective rally with wave B tracing out a nice flat correction, and wave C tracing out a nice impulse pattern with a wave ((iv)) down and wave ((v)) up to complete the entire corrective pattern.  Once we get a new high, I'll be looking to get short this pair on any reversal pattern.  Stocks MAY follow soon after.

Forex Market Insight: EUR/USD Rallies...Why?

PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

Stocks Continue Grind; Euro Rally Faltering

This chart illustrates why I haven't been posting much lately.  Stocks have simply floated higher in a an unconvincing, yet very persistent, grind to higher levels.  Just look at this chart and think to yourself how you would write a post based on this crap above unfolding.  The lack of conviction and volume on the rally has left me skeptical of its ability to be sustained much further.  But it has done so, seemingly on an empty gas tank.  As I've said in past posts, this can continue even longer, and without evidence of a top I don't think it's wise to short here.  I'm waiting for a reversal pattern to form, and hopefully it will be accompanied with solid volume, before I attempt shorting stocks.  The divergence in price between the Dow's new high and the S&P's lack of a new high remains in place.  So if a reversal pattern forms with that divergence still in place, it will leave a nice high probability shorting opportunity in my opinion.

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The euro has a couple options here: one is bullish, one is bearish.  Which I am well aware is an absolutely useless statement at this moment in time.  But let's look at the options to see how things will setup for a trade in the future.  The bullish outlook has the move from 1.2625 to 1.3225 as an impulse move (probably an A wave) and the up-down movement since then can be a "flat correction" (probably a smaller degree ((a))((b))((c)) of B wave).  This means that the current decline is simply wave ((c)) that will come down just below 1.3025 before bottoming and then undergoing a fierce rally to the upside.  Okay, so that's the bullish view.  The bearish view has the entire rally, from 1.2625 to 1.3325, a 3 wave correction that has completed.  The result will be continued selling pressure for the foreseeable future which will take the euro well below the recent 1.2625 low.  Right now, the euro is simply making a stair-step decline, with big looping moves to the downside, and therefore there is no impulsive pattern to help further analyze the bigger picture.  However, the series of lower lows and lower highs means the current trend is down at the moment.

My approach is this; wait for a move below 1.3025 and see what happens.  Continued selling pressure and closes beneath that level will reduce the likelihood of the bullish outlook since wave ((c)) of a flat correction shouldn't go too deep as an EWP guideline (not a rule though).  Since trading is all about probabilities, I think the probability at that point would favor the bearish view and getting short at any opportunity.  On the other hand, if the euro makes a quick dip to 1.3025 and then reverses sharply higher, I will jump on the long side since it would appear that the bullish flat correction might be unfolding and the move higher will probably be a sharp and deep impulsive move higher for wave C.

But unfortunately, at this point we are only left with concluding that the euro will either go up, or it will go down.  A completely useless analysis at this point in time.  However, by looking at our two options of wave patterns, we can sit and wait for more price action to unfold to work ourselves into a high probability trade. 

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PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.

Intermarket Divergence in Place = Bearish for Stocks; Euro Pullback is Bearish

The Dow's new high has created angst in the EWP community, and rightfully so I suppose.  For EWP purists it's tough to explain it away and still try to justify a major top in the overall market.  I am more flexible with my analysis and although I'll never violate an EWP rule, I use EWP as a basis for my overall analysis, not the be-all know-all form that must be adhered to as if it were an infallable law written in stone.  The key is make sure we don't violate any EWP rules, and use our best objective judgment when using EWP guidelines.  I will say, with the experience I've had in these markets, EWP is the most reliable out of all other forms of technical analyis I've tried.  I can't tell you how many times when all technical indicators point to the market moving in one direction, but the EWP count suggests the opposite, the EWP count proves to be correct.  It happens a lot. 

With that little preamble out of the way, let's try to take a basic common sense look at the market.  The Dow made a new high, suggesting that its Primary wave ((2)) did not end last may as previously projected.  The Dow only has 30 stocks in it, and is the bluist of the blue chips for that matter.  So I'm not sure it's the best proxy for crowd psychology as EWP is based on.  This is why I follow the S&P, it has 500 stocks (or close to it), and is much more diverse and touches a much larger crowd than the Dow can.  The larger and more diverse the crowd, the more reliable our EWP wave counts will be.  The S&P has so far failed to confirm the Dow's new high, keeping the original wave count that its Primary wave ((2)) has topped already.  And with today's modest decline, it leaves the potential for a major intermarket divergence to be in place between the Dow and S&P. 

The bottom line is that the market rally is stretched, I think it's hard to argue that.  So what are the plays here?  1) Getting long here at this point in the rally without any meaningful pullback?  I don't think so.  Not wise in my opinion.  2) How about getting short now with a stop above yesterday's high?  This seems like a great risk/reward opportunity I'm jumping all over, despite it being a Friday.  3) And lastly, sitting on the sidelines doing nothing is another options.  Certainly a viable option, at least until we get confirmation a significant top is in.  Regardless of the choice, trading is all about probabilities, not certainties.  So I make every trade with assumption that I'm going to be wrong, and manage my risk accordingly.

Do Low Interest Rates Power Stocks Higher?

Above is another possibility for the Dow.  It suggests that it's in an Intermediate degree "flat correction".  This suggests the larger trend is still up, and pretty much destroys Prechter's call for the past several years.  So I'm not confident in this count at all.  However, it's worth noting this count for at least the short term because even though the count suggests a larger bullish move is still underway, the downward correction still has to undergo a major Intermediate wave (C) pullback that will be fast and deep, about 2,500-3,000 points.  And although it seems unlikely, it's still a valid wave count and therefore must be respected.

The bottom line is that I think the best plays here are to look for shorting opportunities with tight risk and then jump on them, or just wait on the sidelines until solid confirmation of a top comes in.  But getting long here at this point, just doesn't seem like the risk/reward is on your side.

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The euro appears to have completed an A-B-C correction and is now pulling back.  Whether a major top is in, or just a short term top is in, is still in question.  For currencies, I usually don't jump in on a Friday since Sunday afternoon when the market reopens we often get a gap in price which is very tradeable.  I want to get short so I hope we gap-up Sunday afternoon so I can short aggressively at a better price than today AND get the odds of a gap-close on my side.  On the other hand, if the euro gaps lower I can simply wait to get short when it rallies to close the gap.  Either way, I feel I can get the most optimal positioning on the short side if I wait until Sunday afternoon.  Either short on a big gap-up, or if it gaps-down then just wait for it to rally and close the gap before getting short.

Learn How to Apply Fibonacci Retracements to Your Trading

PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.