Thursday, January 6, 2011
Stocks Showing Weakness, but Probably Just a Small 4th Wave; Euro Continues Falling
Internals today were fairly bearish yet volume was still quite light at only 1.09 billion shares traded on the NYSE. Down volume had quite an edge today vs. up volume on the NYSE, and decliners well outpaced advancers on both the NYSE and the S&P. Yet the price decline was relatively tame, and the market just floated sideways most of the day before a mild rally into the close. So to me, the market movement from yesterday and today smells like just a small 4th wave, and one more new high should occur before a sharp and noticable reversal.
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The euro continues its decline and the US dollar continues its rally. Today's decline to new lows made the entire decline this week look like a nice impulsive move, suggesting that the larger downtrend has resumed. With 5 waves down possibly complete, a corrective rally may occur soon that remains well shy of getting above 1.3433. With a nice 5 wave decline on our hands, I'm firmly bearish as long as it trades below 1.3433. And a break below 1.2968 will open the door to an almost certain test of 1.2600 soon after.
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.