Monday, September 17, 2012
With that said, many wavers are perma-bears, like me, so we are always looking for pullbacks. So that's where I sit today. I'm simply looking for a top in this market so I can take another shot at getting short. I don't really see an opportunity to get short here, but it's worth taking into account the apparent 5 wave rally into a subtle reversal formation in the major indices (see above chart). Could this be a quiet top? Possibly. I'm definitely watching the market closely this week in case it is. Consensus on financial media seems to be that you can't fight the Fed and that the obvious path of least resistance is up. Well, that to me tells me I should be looking for a top soon. Be on the lookout for a top, perhaps one was put in last Friday, but it's way too early to confirm, and the evidence to support the bulls is still far superior for right now.
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Anyway, the above chart is just something I noticed when glancing at the S&P 1hr chart. It looks like a series of 4th and 5th waves are occurring. Today's weakness wasn't too convincing on the hourly chart to call a top (although it looks toppish on the daily chart), but overall this type of behavior suggests this market is topping. Once this series of 4th and 5th waves runs its course, it will top and reverse very sharply. Like I said earlier, I don't see a shorting opportunity here yet because the bullish evidence is far superior to the bearish case at the moment. But just a word to the bears.....be ready.
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The euro made minced meat out of my 50%-61% fibonacci reversal zone I posted last week by shooting right through 61% in just a couple days. Although the euro has put in no signs of a top, it's interesting and worth noting that it's ferocious surge higher halted right at the 78.6% fibonacci retracement as you can see in the above chart. This is the maximum comfortable level for a 5 wave retracement, so if the EUR/USD plans on topping soon, this would be a great spot for it to do so. Again, bears be ready.
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.