Sunday, March 6, 2011
Waiting for the Breakout in Stocks; Euro Still in Bull Mode
Thursday I said that the bears needed to get to work Friday if they wanted any chance to take over this market in the short/medium term. They did in fact make an attempt and pushed the market down hard but failed to match the internal intensity the bulls had the day before, and failed to convincingly erase the bulls' gains or take out a key level. So although the bears made a valiant attempt to roar back, so far it has failed to result in anything to convince me that they've taken back control of this market.
I want to see the 1312 level taken out and closed beneath in order for me to get short again. That's the breakout level from Thursday that started the surprise bullish run up to a new high. If the bears can get a close beneath 1312 it will tell me that the run higher was just a correction and that all that bullish momentum behind it was erased and that it was a failed push higher. That would indeed get me bearish and short again.
However, if the 1332.28 level is taken out to the upside then that might get me bullish and long this market for a very short term trade. The bears have failed to convincingly reclaim this market, and the bulls have really taken the reins and pushed this market higher so a new high above 1332.28 will erase all doubt in the uptrend in my view and get me long for the short term.
Learn Elliott Wave Principle
The euro keeps pushing higher and I see no evidence of a topping process occuring. So the euro's uptrend remains well intact. One thing to be aware of is that the 4hr RSI is at a level that has previously marked tops as you can see from my chart above. This doesn't mean that the euro will top right now though. All it means is that it's starting to get a little overbought, and longs should be cautious and alert here. Since the larger trend is still down in my view, I'm simply waiting for signs of a top to get short.
Breaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends
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.