Thursday, September 2, 2010
Market Topping Out; at Least in the Very Short Term
The market has completed a 5 wave rally with the 5th wave completing early this morning, or will do so later today. This is supported by the RSI divergence on the 15 minute chart which is typical of 5th waves. This suggests a top is at hand and the market will pull back AT LEAST in the short term. The first target is around the prior 4th wave extreme at 1076, but a much further decline would be welcomed. So aggressive short term traders might consider gearing up for a decline soon.
As I said yesterday, no follow-through, or an outright reversal of yesterday's big rally would be very bearish. So a sharp selloff would be a nice surprise for the bears. But all is not supportive of this: the Nasdaqs, financials and the small cap Russell 2000 are all much stronger than the blue chip Dow. This suggests that people are ignoring, or leaving, the safe blue chips and rushing into the high risk assets. So risk appettite is high today. This is supportive of a bullish move, not a top.
But for short term traders, I see opportunity to short soon since the EWP structure looks toppish.
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.