Wednesday, August 11, 2010
Barring a Massive Reversal by Close Today, a Significant Top is in
Above is a snapshot of the internals of the market as if 1201 EST, and you can see they're quite dreadful. 86% of NYSE stocks are trading down and only 6 stocks on the S&P are trading higher. In line with the analysis the past few days suggesting a wedge, or diagonal, was at its end it makes sense that we'd see these numbers on the decline today. It also means that the divergences between the indices I've been talking about remain in place and are now much further and harder for the bulls to rally and resolve those divergencse. Advantage bears.
The breakaway gap and accompanying internals suggest this move is a wave 3 at some degree. If so, the market should grind lower in the near future. I previously mentioned that my initial target for the decline after the diagonal was the 1100 area, which was easily taken out this morning. But with the internals so bearish and the technicals suggesting a wave 3 of same degree is underway, I see no reason to cover shorts on short term trades as long as this decline holds into the close today.
YESTERDAY'S EURO CHART
THIS MORNING'S CHART
Well EWP certainly isn't perfect, but when it works, it works very well. Yesterday's call for a strong decline proved accurate as the euro has been absolutely hammered last night into today. I see no reason to not be short this pair.
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.