Stock Downtrend Tested Today; Euro Extends Correction

Stocks' downtrend remains intact by the skin of their teeth.  Today's rallys stopped short of making a new high above 1346.82 in the S&P.  So the series of lower highs and lower lows is still in place, and therefore the downtrend remains in place.  Shorting here against 1346.82 would be a good risk/reward trade for the bears.  Although in the bigger picture, with no clear wave count in place, and certainly nothing impulsive looking, I think this downward action lately is all part of a correction that will result in a move to new highs on the year eventually.  So if I were short, I'd play it tight here and only for the short term action.  Longer term the market still seems bullish.

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The euro's rally has gone much deeper than I would have liked to see for my impulsive count to remain in high confidence.  Breaking out to a new high makes this structure shown above look very similar to what we saw in November 2010 to January 2011 where most wavers were trying to label a clear 3 wave move as an impulsive decline. The result was a confirmation of the 3 wave decline being a correction and a sharp and long rally to new highs ensued for months.  Well this structure above on the 8hr chart is starting to look a lot like that structure on the daily chart I just mentioned.  If correct, then my count above is wrong and the euro is getting ready to blast off higher again.  But we'll see.  I'm not as convinced of the euro's bullish potential like I am for stocks.  So I want to see how the euro trades the rest of the day and into the overnight session tonight.  Follow through to the upside would knock me out of the short side and put me on the sidelines.  But a reversal lower would keep me firmly bearish.

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.