Yesterday's Chart Updated with Today's Action
The top chart shows my primary count from yesterday which called for a sharp pop to complete wave ii and then a reversal. Today we got just that. Today's action is very bearish. Internals were strong most of the day but ended the day flat with the big reversal bringing the bears back into the market. The VIX also went from negative to positive territory as well. So the "all clear" signal for the bulls is definitely not in play yet. The sharp decline with the impulsive-looking structure at the end of trading today suggests that wave ii may be over and that wave iii of (iii) of 3 of [3] or C is underway. The market has been unfolding in beautiful impulsive declines and rallying in somewhat predictable 3 wave, or 3 wave combination, moves. Plus the internals of the market, along with other methods of technical analysis, are also falling into place to support the wave count. So all-in-all, things continue to look good for the bears. In order for this to continue, we need to see the market selloff sharply from here, If for some reason wave ii wants to chug a bit higher first, it needs to stay below 1105.67 for this count to remain on track.
1hr Nasdaq 100 and Fibonacci Chart
Above is an hourly chart of the Nasdaq 100 showing that the index's rally that started May 25th had halted and reversed at the 61% fibonacci retracement level of the previous 5 wave decline (count not charted).
10min Nasdaq 100 Chart and Fibonacci
Above is a 10min chart of the Nasdaq 100 showing that the rally that started June 8th also retraced a fibonacci level before reversing; only this time it was only 38%.
The fact that the index is respecting fibonacci retracement levels also suggests that the larger trend is still down. And the fact that the first retracement was 61%, and the second retracement was 38%, may tell us that the downtrend is building momentum and about ready to tumble lower in a big way. Solidly breaking through the S&P 1040 level will be a good sign that the downtrend has resumed, and the next wave of selling pressure should be extremely fierce and strong.
US Dollar vs. the Japanese Yen
One last thing, the currency pair that has been quite correlated to the stock market lately has been the USD/JPY. On the very small 10min timeframe we see a clear and clean 5 wave decline. This implies the trend has switched to down. So this too may be an indicator that the stock market's trend has also reversed to down as well. Tomorrow's action should give us more certainty of this. If the wave count I posted at the top of this blog is correct, there should be no mistake about it as the market should selloff VERY sharply very soon.
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.
1 comment:
I find it interesting how the Nasdaq has been lagging the last couple of days. Compared with the S&P and the DOW, the Nasdaq's peak today was not much of a rise from yesterday's peak. And while the S&P and the DOW are now within striking distance of their June 3 highs, the Nasdaq isn't even close.
If this action persists, it could set up a big divergence within the next few days where the blue chips exceed the June 3 rally highs but the techs don't.
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