Thursday, June 16, 2011
Euro and Stock Bear WARNING
Price action today in the S&P and the euro suggest a possible bullish reversal just took place which might act as a floor for these markets for at least a few days.
Volume was solid today, similar to yesterday's, only the internals were flat as the market seemed a bit confused today. But with a strong rally at the close, at the moment it's sending up flags that the bulls might have regained control of the market for now.
Learn Elliott Wave Principle
Seeing this ending diagonal-ish looking structure here in the daily S&P chart is not encouraging for the bears. The "bunching" up of price usually occurs before a very big and sharp reversal. We may get some more choppy downward movement for a few days but at some point this market will give. There will be a very sharp move to the upside or downside judging by the structure developing. And right now I'd guess that the move will be to the upside since it usually precedes a reversal, but either way, be prepared for a sharp move. Taking profits on some aggressive short positions might be wise if the overnight session holds firm or rallies big.
Six Straight Weeks of Decline Take DJIA Below 12,000: What Now?
The euro is not my friend today either since it put in a potential daily reversal candle itself. This sends up the warning flags to me and had me put a stop at 1.4496 on my short position. A move above that level will make the recent decline a 3 wave move, which is a correction, and imply new highs are on the way. So any movement above that level means I shouldn't be short.
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.