The S&P appears to be in a wave ii correction as shown above. The behavior of the overall market is a bit suspect if it's in a wave (iii) as I have labeled. And what I mean by that is that the Dow was strong today while the S&P was substantially weaker, and this wave (iii) continues to get more and more sideways. If the market is in a wave (iii), I'd expect all major indices to be sharply moving higher in unison in a nice healthy rise with strong volume and internals. Nonetheless, it's still quite possible and it sets up a good bullish opportunity with a stop just below 1190. If the market continues on sideways without shooting higher like a wave iii of (iii) should, then I'll look at less bullish sideways moves that would fit into the current market behavior better. I don't see any reason evidence suggesting a top is in at this point, so shorting right now does not seem wise. If anything, I'd be looking to get long for a short term trade with a stop below 1190 if a good opportunity arises.
EUR/USD Daily
I haven't talked about currencies for a while because I haven't seen any good opportunities lately. But I do see one in the EUR/USD. Looking at the daily chart above we can see a clear 5 wave drop which has now resulted in some sideways action. A 4th wave triangle is ruled out because it just recently made a new low (what I labeled wave 'b'). But the 3 wave rise from 1.3266, then decline beneath the wave 5 low, tells me that a "flat" correction is probably unfolding. If correct, we should now be in a 5 wave impulse rally for wave C. Wave C's of flat corrections normally go just above wave 'a', but since wave 4 is so close by, and it would fit EWP's "right look" better with a bigger and longer correction, I think the wave C rally should carry just above 1.3817. So I'm long the EUR/USD from current levels with a small position and will add to it if it falls lower. My stop level is at 1.3197. So right now I'm risking 188 pips to make a possible 432 pips.
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.
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