Wednesday, April 21, 2010

Stock Market Looking Bullish



Unfortunately the market has not wanted to fall and appears to still be in "bull mode". Notice the above 5min S&P cash chart. We have a nice 5 wave rally followed by 2 three-wave declines I labeled as a WXY combination correction. Going up in 5 and then declining in 3s is basic EWP stuff and suggests the larger trend is up. There are a series of lower lows and highs that have formed so until that trend is broken the bears can hope for the best. But the evidence right now suggests further rallying ahead of us. If the 5 wave move is correct, then it's probably a wave 1 and we're about to see a very strong wave 3 up anytime now. So if I see strong internals and volume along with price strength tomorrow, I might be inclined to jump on the long side for a short term trade. But we'll have to wait and see how the market reacts.

So we're basically at a fork in the road where the next big move in the market should tell us where the larger trend is going and I can jump on board with a position accordingly. Right now, the evidence supports the bullish case with the 5 wave rise and 3 wave declines following it, but the risk/reward favors the bears at this point. I'm currently still short but will stop out when the S&P makes a new high. When that happens, I'll look at the internals of the market, if they're solid then I might take a long position.


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.

2 comments:

moola said...

I am long,let us ride the bull for a while and have fun and as soon as you identify the top, will jump off and aggressively short the market. Moola

Todd said...

I'm still short but will probably get long on a new high for the year. The Asian session and currencies and futures are pointing to weakness tomorrow. We'll see if they buy the dip or sell into it.

Todd

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