Nasdaqs Make New Highs, Russell Declined in 5 Waves; so Who's Leading the Market?

S&P Cash Bearish




Above is a continuation of the count I posted Sunday. If the larger trend has turned down, then this is one of the ugliest and most pathetic impulse waves I've seen in a long long time. This ugly structure, along with the fact that the Nasdaqs made new highs, prevent me from being very confident in the bearish short term outlook. The Nasdaqs making new highs today most likely means they're leading the market, and will pull the other indices to new highs as well, which is what Tech usually does. But as long as the Dow and S&P remain below their highs on the year, the bears have a great risk/reward opportunity to get positioned with tight stops, and there's plenty of evidence to the bearish side anyway. One reason it may be worth while other than the possible 5 wave down S&P count shown above, is the behavior in the Russell 2000.


Russell 2000




The high risk indices, like the Nasdaqs, tend to lead the overall market. Even though the Nasdaqs made new highs, the Russell 2000 did not, and it declined in a much more probable impulsive move last week. So are the Nasdaqs leading the market higher, or is the Russell leading the market lower? Unfortunately I have no idea, but the evidence of an overextended rally and limited upside for the bulls tell me that I should be looking for opportunities to get short when I see them.


S&P Cash Bullish




Lastly, I wanted to show the bullish count. This accounts for the declining structure much better than the impulsive decline in my view. But the other evidence of an exhausted rally is just too overwhelming for me to disregard all that and get long at this point. So I'm opting to let the market decide for me. As long as the both the Dow and S&P remain below their highs for the year, then I'm bearish. A break above those highs will again have me stand aside looking for another opportunity to get short for the short term. The larger trend outlook at this point is inconclusive.


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.