Thursday, December 16, 2010
The Wait Continues
Internals today were a bit unusual. The advancers vs. decliners in the NYSE and S&P were both very bullish, yet volume and up volume was quite timid compared to the advancers:decliner ratio. If a little more volume came into this market it probably would've resulted in a much greater advance for the day. But volume didn't come in, and the market flattened out after the initial morning surge, leaving us with a fairly solid close higher today. Again, the bulls are having trouble pushing the market higher and sustaining it, the internals support that. But on the flipside, the bears aren't doing much either, so the market is still able to float higher for now. This is typical behavior for this time of year though, so without signs of a reversal, we should expect higher levels and wait to get short in my opinion.
The wave count has us waiting for Minute wave ((v)) to end. With the holiday season and typical light and bullish trading until after the New Year upon us, I could easily see this market holding up until early January. It's certainly not my prefered outlook, but definitely possible considering the typically bullish time of year we're in now. I would steer clear of short term long positions here and either establish shorts now with well defined risk, or wait until a good shorting opportunity arises that allows for managing risk properly. The bottom line is that for the short term, I think the next good opportunity will be to the downside.
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The euro challenged the congestion area surrounding 1.3200 I mentioned yesterday which I said could act as temporary support. It did just that today, and now is pushing higher up off that support floor. In light trading it might be hard to bust through that support level, and it's possible to count 5 waves down on the intraday charts suggesting a bounce is do, but eventually I do feel that it's likely the 1.3200 level will be taken out handily in the near future. Doing so would instill more confidence in the aggressively bearish count above.
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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.