The market has completed a 5 wave rally with the 5th wave completing early this morning, or will do so later today. This is supported by the RSI divergence on the 15 minute chart which is typical of 5th waves. This suggests a top is at hand and the market will pull back AT LEAST in the short term. The first target is around the prior 4th wave extreme at 1076, but a much further decline would be welcomed. So aggressive short term traders might consider gearing up for a decline soon.
As I said yesterday, no follow-through, or an outright reversal of yesterday's big rally would be very bearish. So a sharp selloff would be a nice surprise for the bears. But all is not supportive of this: the Nasdaqs, financials and the small cap Russell 2000 are all much stronger than the blue chip Dow. This suggests that people are ignoring, or leaving, the safe blue chips and rushing into the high risk assets. So risk appettite is high today. This is supportive of a bullish move, not a top.
But for short term traders, I see opportunity to short soon since the EWP structure looks toppish.
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.
13 comments:
The other (small) variation could be that the movement from 11:00 - 13:25 (on NDX) is a sideways 4, with an upwards shoot coming up.
You look to be right. The market is shooting higher right now which fits well with a "thrust". But that just means the top will be delayed a bit. End of day today or tomorrow should see some degree of reversal I feel.
NDX up 1% with more EOD ramp to come. I am assuming that qualifies for a good follow-through.
What would you say to the idea that we may be just finishing an A wave of the 1039 lows, and now head down into the 1060 area for a B wave...then a C up to finish wave ii?
The reason I say this is the time-frame. The move down off the August 9th highs (if it's an impulsive i) took a few weeks - is it unrealistic to think that the correction would be over so soon?
Yes unfortunately I'd say so. Even the S&P is showing solid strength now. 1100 looks quite vulnerable now, but we still have NFP tomorrow which can really mix things up.
That very well may be if you are counting the decline from Aug 9 as an impulsive 5 wave decline. To me personally it looks more like a 3 wave move so I think it's waves (i) (ii) and then i ii. A break above 1100.14 will negate that. Under my outlook, wave i only took 6 trading days and the wave ii flat has also taken 6 days. So it's time to rollover soon, like tomorrow, if my count is correct. But if you're counting the entire decline as an impulsive move, this is irrelevant to you and your logic is sound if you base it on the completed impulsive move down from August 9.
Today's "game plan" was to hold 1080.
Ok, right. I see your count...
Thanks for the great regular analysis; much appreciated!
I take it you're bullish. What's your wave count? I'm starting work on a bullish one now to prepare for 1100.14 falling soon.
No problem :-)
I have bearish positions, but am trying to read their game plan. The market likes to inch up closer to the 'line in sand' and then gap the next day. Unfortunate, but true.
The (i), (ii), i (with extended 5th), ii, seems to fit. But I am beginning to worry about the size of ii. It should have been less than 50% of i I would think.
Both SPX & NDX have a small gap from the 8/19 open. Last line in sand.
I see the S&P gap could be closed just above 1094, boy that's close. The bad news is like you said, the correction is quite deep and bears have little leeway here. But the good news is that tomorrow's NFP report could lead to a big move in equities, so the bears have the setup to try and gain some traction and momentum tomorrow. The 5min to 15min charts show a strong bearish divergence with the RSI typical of a 5th wave right now, so at least a short term pullback should be coming. What's interesting is that even though a break above 1100.14 would make the drop from Aug 9th a 3 wave move, I noticed that prior to the wave 3 of (1) October 2007 massive selloff there was at least one clear 3 wave decline prior to it happening. So could this just be a repeat of that unconventional structure before a massive selloff? I'm going to try and touch on that aspect when I post something tonight.
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