Well the fracturing of the various indices and low volume yesterday was just another pause and recharge before the next leg up in stocks. Today the market surged up with a gap at the open. I was hoping that it would soon reverse and mark a nice spike and reversal which may mark a top for wave (ii). But the market has held up nicely all day, is now pushing higher towards the close (for now), and the internals of the market are very strong although volume still remains a bit light. So the bears appear to be back in their caves sleeping for the summer with a few bulls running around doing what they please.
I'm not fighting the bulls in light summer trading, and if we're in large wave 3s at two degrees of trend, then the market needs to prove it. And it certainly isn't doing it SO FAR. If the market can reverse and decline heavy tomorrow, and preferably reverse with a gap down to create an island reversal pattern, then the bears may still have a chance. But the market needs to move lower quickly to support the proposed wave count. As it stands right now, the entire rally the past two weeks can count as a 5 wave move, suggesting that the larger trend has turned up. So the bulls have certainly gained the advantage here, and the new surge of strong internals gives them the momentum to keep pushing higher in the short/medium term.
The bears definitely have work to do. The close today, and the follow-up action tomorrow will tell us a lot.
UPDATED INTERNALS AFTER THE CLOSE
So the market closed very strong with volume that kissed the 13 day moving average on the NYSE. I see no bearish signs in the market right now, and the bulls definitely gained the upper hand today. That can easily completely reverse tomorrow, but it's gonna have to if the bears want a chance still. I'll discuss tomorrow or Thursday the impact and moves going forward if the rally continues higher and makes it evident that the big wave 3 again remains ellusive.
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.
4 comments:
From an Elliott wave perspective, I feel that the retrace (if that's indeed what this is) from 1011 is getting too deep for comfort.
However, what is making me hold on to my puts a little bit longer is that the tape is running up against several clusters of what should be formidable resistance.
For one, we are testing the underside of the trendline that connects the 666 low to the most recent of the 1040 lows. Since May, it seems like each big rally has tested (ultimately failing) the underside of the trendline connecting 666 to the second-to-last intermediate low (ie, the low which the latest intermediate low had broken).
For another, we are testing the underside of the trendline that connects the intermediate highs from early in Primary Wave 1 (2007/2008) and also runs through the Jan 2010 top at SPX 1150.
Plus we have the 50 and 200 daily moving averages nearby by as overhead resistance. The few points that the S&P and DOW retreated into the close was not much in absolute terms, but it did allow them to close just below the DMA's that they had pierced through intraday.
All of that said, I definitely agree with you Todd that if we don't turn down sharply very soon it's bad news for the bears.
We are still in 3rd wave a 1108 of C.
P&F -1108 overhead.
1175 if we break 1108.
Hey Rob,
Thanks for posting that info since I have not been following those trendlines much. We'll see the behavior in tomorrow and Thursday. The correction is quite deep and strong indeed. Very concerning.
Todd
If you have a chart with your wave count that would support a rally to 1175 can you email it to me?
Todd
toddsblog@comcast.net
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