Market participants remain uninterested in stocks this year as volume on the NYSE again held under 1 billion shares today. I'm one of those "uninterested" folks since the market is quite boring and uneventful lately. Great for long term investors, but horrible for swing traders.
The S&P, and especially the Nasdaqs, keep pushing higher. The S&P appears to have just traced out an overlapping wave structure to the downside earlier as part of a correction (maybe a 4th wave). Now the market is moving higher for a third test of the highs. As I've said many times before, triple tops are extremely rare, so don't plan on them. This means higher levels in the near future. But how long those highs remain in place is anybody's guess. I'm a bear lying in wait for his chance to strike.
The Dow appears to be lagging the S&P and especially the Nasdaqs. It MAY be part of a fracturing of various indices, or it could just mean that it's "risk on" right now and people are dumping boring blue chips and going with higher risk names. The latter scenario is good for the bulls, the former scenario is good for the bears.
The bottom line is that I think the market is overextended right now and there's too much risk to the downside to get long here. But with no solid evidence of a top in place yet, I can't get short either. So I wait.
Earnings Drive Stock Prices? See This Chart Before You Answer
On the other hand the XLF (financials ETF) sports a nice 5 wave decline and 3 wave rally topped off with a nice sharp reversal candle in wave ((C)). If this count is correct, expect financials to fall hard real soon. The overall stock market should soon follow.
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The euro fell just shy of giving a perfect 5 wave decline, but the Australian dollar did give us that 5 wave decline against the USD. This suggests that the larger trend is down, and although the euro decline is not a perfect 5 wave move, it still looks impulsive. And with the current upward-to-sideways choppy action looking corrective, I'd be looking to short, or add to short positions, on rallies here. The euro bears and US dollar bulls appear to be in firm control here.
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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.
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