Today's strong selloff on severely weakened breadth warns of change to the rally scenario projected. For the first time in a few days the Nasdaqs showed weakness that led the Dow and S&P down. As you can see from the top chart, there's a mild 3 wave rally on the daily chart. This, combined with the stochastics in oversold territory looking like they're going to drop soon, warns that the next round of selling pressure may already be underway. Tomorrow should tell us a lot, and I have a feeling the auto bailout results or speculation may play a key role. Continued weakness in breadth and price tomorrow will signal that the next decline phase to new lows on the year is probably already underway. But I expect to see strength tomorrow and a strong rally in the S&P to the 950-1000 area before topping. I do feel this rally will be sharp and short lived, so it I will be shorting aggressively as it rises. If the market doesn't rally by Tues./Wed. next week, it probably means it won't rally at all.
3 comments:
Wow, you are one intelligent person. Before discovering the EWP, I was following the Europe market CAC 40 and Dax chart because it seem to follow the dow chart. But I soon discover that the dow only follow those chart like 25% of the time. One day, the dow was almost exactly the same as the Dax chart and my prediction of the dow closing point was only 3 points away. Now that discover EWP, which look like a better strategy, I am willing to spend my whole winter break learning more about it.
Thanks for the post! Discovering EWP is definitely where my trading turned the corner for the better. Have you read Prechter and Frost's book on EWP? I highly recommend it.
Also, www.elliottwave.com has a lot of good resources and tools.
Post a Comment