Wednesday, July 13, 2011

Stock Outlook Mixed; Euro Breaking Down

Late last week we saw some topping action that suggested weakness going into this week.  And we got it.  But it may be over now.  There is still a clear 3 wave decline (ABC) from the high on the year in the S&P, so a new high on the year seems likely.  We can't forget that.  Only the Nasdaq 100 managed a new high while the other major indices failed.  Now, the rally from the wave C low looks impulsive, with the recent weakness this week being a wave ((iv)).  If correct, stocks should be on their way to new highs on the year soon.

How to Find and "Hook" Potential Trade Setups

If you close your eyes and pretend that there is not an ABC three wave decline from the high on the year, then this chart might convince you of taking a bearish position.  There is an imperfect 5 wave decline that just completed on the intraday charts.  This alone is not compelling enough to me to get short.  But a failure to break above 1360 and a sharp decline to a new low would get me on the bearish side rather quickly.

Learn Elliott Wave Principle


The euro is declining in a nice impulsive patern, it even subdivides nicely into 5 wave moves.  The chart speaks for itself, the euro will confirm that it has started a major downtrend when wave 5 breaks down to a new low.

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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