Tuesday, August 30, 2011
Hurricane Irene Washed the Volume Away; Euro Trying to Breakout
It looks like the hurricane might have washed out the Wall Street players here as volume remains very light and is preventing me from trying to get long this market. Instead, I took a very small short position on today's weakness and plan to add short until volume reappears.
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The above count seems to be the best shot at a short term count. It shows Minor wave 4 as a double zig-zag correction. I do feel this count is not very likely when looking at it all by itself because Minor wave 4 has become quite long in time compared to Minor wave 2, making it hard to be confident in EWP's "right look" guideline. But with volume so low on the recent rise, and the longer term wave count appearing to still be incomplete to the downside, I'll hang on to this above count as long as it remains valid. A big surge in volume with an upside move might change that view in a hurry though. I want to be very nimble right now since I don't have high confidence in either side of the market at the moment. But the wave count suggests I should be trying to get short when opportunities arise.
Today's late day reversal near 50% fibonacci retracement (1225) might signal the top of Minor wave 4. Follow through to the downside tomorrow in an impulsive manner will add evidence to this outlook and suggest the aggressive short term bears take a shot at the short side. If not, look for the 1225-1230 area to be reached before a significant reversal occurs.
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The euro still can't break out, but it's trying to, and will. The triangle consolidation has tightened significantly that will result in a sharp move in either direction. I can only guess that the move will be to the downside, but that guess is not a good reason to attempt getting short here. I remain on the sidelines here.
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.