Wednesday, August 18, 2010
Picture Perfect EWP Waves Still Intact; but Decline Must Start Soon
Today the market just sputtered around, directionless it seems. Volume remained quite light at NYSE posting 922 million shares today. Advancers mildly exceeded decliners and up volume was mildly higher than down volume. So nothing telling or exciting in the internals. The Nasdaqs and Russell 2000 were up about 0.30% today while the Dow and S&P were up about half that. So the higher risk indices were modestly higher than the blue chip indices. So there are no real signs of either bullish or bearish underpinnings in that regard.
But when we look at the wave count, things look a lot clearer. The 5 wave decline from the high established a last week remain intact and is very healthy looking for the bears. The rally this week has so far unfolded in a 3 wave move which is a correction. The market's sharp decline this morning MAY be the resumption of the downtrend that sent the market falling hard in that 5 wave decline last week, but that's yet to be confirmed.
Also notice on the daily S&P chart that the 1100 level is providing quite a ceiling for the current rally lately. The market has been rejected their twice. Perhaps this is an important level for the market. So for the real short term players, I think that staying under 1100 is bearish for the very short term but a strong close above it with high volume may signal the bulls are gaining control. We'll see
So unfortunately I don't see any strong evidence for the bulls or bears in the very short term. But going out in time frames a little bit, it seems clear right now that the bears have control of this market and so I'd only be looking for shorting opportunities since the market can fall hard at any time. Hopefully tomorrow or Friday we can get a more definitive move out of this market with volume that at least gets above 1 billion shares to give this market conviction in any direction.
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.