Monday, February 28, 2011
Stock Rally at Good Reversal Point; Euro Still Has New High Ahead
The market has rallied as expected. The Nasdaq Composite did not confirm the last new low in the Dow and S&P and the market has been in rally-mode ever since. I'll be looking for another such divergence, only reversed, to mark a top. Above you can see the wave count and that the S&P is in between two common fibonacci levels for 2nd waves to stop at (61% and 78%). Internals today are still quite strong but it's too early to just give it all to the bulls the rest of the day. I'll be looking for signs of a reversal both internally, and in the price action today.
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The Dow on the other hand is having trouble getting above its 61% fibonacci retracement level suggesting this index may be topping right now. I don't see any other signs of that at the moment though, so this behavior here is simply just something to watch at the moment. The S&P might want to push into its 78% retracement level which should get the Dow to a new high on the day, so calling "top tick" here doesn't seem wise. But the behavior both in price, internally, and momentum is worth watching in the indices right now since they are in fact at levels that normally market tops and reversals if the larger trend has indeed turned down.
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As I've said before, the euro is not tracing out clear elliott wave patterns so I'm stuck with the basics on this pair. Seeing a 3 wave drop 1.3863 it is clear that at least one more new high above that level must be achieved before looking for a top and reversal. The pair made it within pips of making that new high last night, but so far is left just shy of doing so. I still think we'll see another push to above 1.3863, although coming below 1.3700 would put that into some doubt.
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.