Tuesday, September 11, 2012
Stocks Push Higher; Euro Enters Reversal Zone
Stocks continue to levitate, and annoy me, as usual. It's tough to keep posting "waiting for stock reversal" in every blog post every day. So I'm spreading it out a bit between posts. I know some of you want posts everyday, even if the Dow moves 3 points. But I it just becomes too repetitive unless something new and significant develops. I have Sept puts on the SPY that are all but lost at this point, but losers have been a recurring theme for EWP stock bears for quite a while.
You can see on the above weekly S&P chart that the uptrend of the past few years is still well intact. So getting aggressively long term bearish does not seem wise here. On a short term basis, I'm still looking for a top and reversal. It will take long time, and a lot of S&P points lower, to convince me that this uptrend is broken. But that doesn't mean we can't try to profit from short term pullbacks. So I'm just looking for short term moves at this point.
Looking a the weekly chart above you'll notice in 2011 there was a divergence between price and the RSI right before a head and shoulders top occurred. What followed was a 300 point S&P drop that occurred fairly quickly. Right now a similar divergence between price and the RSI is occuring as well. But the setup is not confirmed until price turns down and the RSI starts heading lower. So I'm not jumping in with more short poisitions just because of this setup here....no way, it's not even complete yet. What it means is that it's something to keep an eye on if stocks do head lower near current levels. But to be honest, right now I see this as just a waiting game for the bears. The uptrend, both short and long term, remains intact.
When an Over-Ripe Market is Ready to Spoil
I know many of you wavers out there are as frustrated as I am. But it's important to keep our sanity and not let the markets dictate our moods in life. So for those of you bummed out like me, check out this puppy:
Cute little guy huh? If you don't smile when you see this, check your pulse and make sure you're sill alive......bottom line: don't let these markets take control of you, keep your sense of humor and focus on the things that are really important in life.
In my last post I said the EUR/USD would try to rally back to the 1.2800 area before reversing. This area is just above the prior 4th wave (not labeled) and is in between two common retracement levels (50%-61%). It is trading in that zone now. There are a lot of news events this week so be on the lookout for a reversal pattern in the euro. I will be watching closely and looking for an opportunity to get short. I may even start establishing very small short positions right now, and add on if continues rising. But the bottom line is that the euro should be nearing an end to its rally and giving way to shooting towards new lows beneath 1.2000.
Learn Elliott Wave Principle
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.