Tuesday, October 4, 2011
Stock Reversal MIGHT Have Legs; Euro Charging Toward Gap Near 1.40
Today's late day reversal was impressive as far as the price action goes and internally it was quite strong as well since with only 1 hour of rallying the NYSE had about 85% of volume trade to the upside and almost 1.7 billion total shares traded. This rally got my attention.
Stocks: Buying Opportunity or "Free Fall" Ahead? Bob Prechter's Free Report Expires October 7th
I'm not posting the wave count today because it suggests major selling ahead, which may still be true. But the theme of tonight's post is that of caution for the bears and I don't want to have a chart with a wave count that suggests major selling ahead while saying that I'm being cautious and have removed all my short positions. That will only cause confusion.
Tomorrow's action will tell us a lot. If the market stays firm and even follows through to the upside on solid volume, then I'll be looking to get long soon since Intermediate wave (2) up might be underway. But if today's big rally is completely reversed tomorrow, then it's game on again for the bears. So tomorrow's action is important. Right now, I have no equity positions at all.
Learn Elliott Wave Principle
Yesterday I mentioned that the euro is getting oversold and that I lightened up some of my short positions and with today's rally I lightened up a little more. The euro may be simply heading higher to close its gap just below 1.3400, or it may have put in a big reversal that will drift the euro higher towards 1.4000 during the next several weeks. Either way, the euro was oversold and bounced sharply today which screams at me to reduce risk and take profits. I do still have 50% of my original short position on, but that is more of a long term play.
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.