Wednesday, November 10, 2010
Cisco Making Futures Grumpy; Euro Bears Need to Watch for Inverse H&S
Internals today were quite bullish, and other than the Dow, the S&P, Tech, small caps and financials did quite well which explains the positive internals we see at today's close. It seems highly possible that the stock market has formed a short term top though since silver appears to have finished a blow off top and the euro appears to have top as well. How big of a top in stocks will only be determined as the wave structure unfolds in the coming days/weeks. But looking Cisco down 12.5% in afterhours at the time of writing, and the S&P futures getting hammered right now as well, it's possible we'll see some more downward pressure tomorrow.
Nothing really compelling to note in the stock market as far as the wave count goes. It seems that a Minute wave (iv) is probably unfolding which will eventually give wave to a Minute wave (v) rally that should finally cap off Primary wave ((2)) (see long term count). Right now the Nasdaq Composite appears to be bumping up against resistance and prior congestion so a reversal from current levels would make sense. And considering Cisco's 12.5% after hours drop it makes the reversal in Tech seem imminent.
The euro failed to pick up speed and continue its descent lower. But the impulsive count still remains valid so I strongly favor the downside here since the profit potential is so great here. I'd like to see the euro keep a 4hr (or higher) close beneath 1.3824 to keep my bearish stance comfortable. A quick poke above 1.3824 and reversal doesn't count. But a strong sharp shot and close above 1.3973 would get my attention and have me look at other markets and indicators to try and determine if the bears are still in control.
Elliott Wave Video Crash Course
On the 15min chart it gives some reasons for concern for the bears. I don't like the sharp dip to a new low then reversal higher to trade sideways at prior congestion. This is classic bottoming behavior, and know as an inverse head and shoulders pattern here. This is another reason I'd like to see the euro remain well below 1.3824, because a close above that level on the 4hr chart or above may signal a sharp shot higher. The best thing for the bears would be to see a sharp shot lower, preferably below today's low, during tonight's Asian or European sessions. So tonight's action may be telling for the euro in the days to come.
Tomorrow is the Veteran's Day holiday. It's on a wierd day, Thursday, but I still think a lot of folks will be taking time off and relaxing, perhaps the rest of the week like I am. So we may not see much action or volume in the markets the rest of the week.
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.