Today's move higher both in price and internally was impressive. Total volume was high at 1.37 billion shares on the NYSE, up volume represented 90% of total volume, and advancers well exceeded decliners. Moves like this often act as launching pads for sustained moves higher. Only a close below today's low will negate the bullish outlook and suggest a top may be in. Until then, expect higher levels.
My guess is that some folks shorted the market or stayed on the sidelines expecting a "sell the news" event after the Fed announcement yesterday. When the market held stable after the announcement and into the global sessions overnight, the shorts covered and the sidelined folks jumped in with full force. This is what I feel was behind the move higher today. Is it just a capitulation move before a reversal? Or the foundation of a sustained move higher in the coming months? Hopefully next week we'll get our answer so we can trade accordingly.
The Next Major Disaster Developing for Bond Holders
Well the inevitable happened today as the blue chips followed the Nasdaqs to new highs on the year with today's surge. The past week or so I've assumed this would occur since the uptrend remained well intact and the Nasdaqs had already made new highs on the year, and they tend to lead the overall market.
Today's rally to new highs was done on big volume with a move that closed on the highs. Quite convincing indeed for a larger sustained bull run. But we'll see. The current rally that started in August has taken little breathers other than sideways chops, making it feel a lot like a 3rd wave. But unfortunately for the bulls the rally certainly doesn't subdivide on the intraday charts well as a 3rd wave, nor do momentum indicators support this case well either. So it could easily be a C, or a larger zig-zag forming in my view.
The XLF (financials ETF) was on fire today, well exceeding the market's gains again. It gapped higher and made a new high today as well. If the XLF continues to outpace the S&P's gains higher for a long time it may catch up to it's rally the past few months, eliminated the divergence they've had, as well as some of the best evidence the bears have to a longer term bear picture. So I'm watching the XLF closely.
With tomorrow being Friday, I doubt a heavy bear stampede will enter the market going into the weekend, but if early next week we can get a gap down reversal in the XLF creating an island pattern, and the major indices can close below today's intraday lows, then we'd have our first solid signs that Primary wave 2 has topped and that perhaps Primary wave 3 has started. But until that happens, we must continue to understand that the market is showing no signs of stopping its push higher and that until the above action occurs, higher levels should be expected.
"Market Manipulation" Is Not Why Most Traders Lose
Of course the euro rallied, and the dollar sank, in conjunction with the stock market rally today. I'm counting the euro as thrusting in a Minor wave 5 from a Minor wave 4 triangle right now. Once its thrust tops and reverses, it should mark a major top and move down to parity with the US dollar eventually. There are no signs of reversal yet htough, but when they arise I'll certainly mention them here. A top in the euro and bottom in the US dollar should occur about the same time equities top and reverse.
DJIA Priced in Gold: What It Means for the Long-Term Trend
Of the many forward-looking market indicators we at EWI employ, one of the most interesting tools (and least discussed in the financial media) is the DJIA priced in gold -- "the real money," as EWI's president Robert Prechter calls it. What implications might the present position of Dow/gold have for the long-term trend of the nominal Dow? In this video, Elliott Wave International's Steven Hochberg shows you several revealing charts that answer this question.
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