Stocks and Euro Look Bearish Here

Nice action today in the markets because it seems it has cleared up some of the clouds hovering over my wave counts.  And more importantly, I think I have a better idea of the wave count we should follow for the short term. 

The market was strong most of the day and reversed into the close.  In addition, volume was big today at 1.6 billion shares on the NYSE.  So today’s rally and reversal into negative territory in some indices on big volume smells like a bullish capitulation to me.  I expect today’s reversal to continue at least tomorrow, if not the rest of the week.  The bears should be in control now.

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The new highs today pretty much put the triangle at the bottom of the list right now.  It could be an “irregular triangle”, but it’s taken so much time compared to Minute wave ((ii)), and it has only completed Minuette waves (a) and (b) of the triangle.  So it’s unlikely at this point, but still possible.  I’m taking it from my top choice and moving it to my bottom choice now.

There are two much more viable options for likely wave counts I see here.  My top choice is shown above.  It has Minuette wave (b) completing a flat correction, and now a sharp impulsive Minuette wave (c) should take the S&P below Minuette wave (a)’s low to around 1165 or so before bottoming.

The top alternate count has Minute wave ((iv)) already complete, and the subdivisions of Minute wave ((v)) are already underway.  I think Minute wave ((iv)) is a bit too short to make this my top count, but it certainly is a strong contender here.  A sharp impulsive decline right through 1160 will put this count as my top choice.  A break below 1129.24 will in fact make it my top choice and signal that a major top is probably already in.

Both counts suggest the upside is limited, or already done.  So I’d be looking to short at this point.

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The euro rallied strong yesterday but reversed nicely today, keeping the short term wave count intact.  So the euro bears still seem to be in control, although not convincingly quite yet.  As long as the Minor wave 2 high holds, then I’m bearish.  If that high broken though, I’m neutral and out of the way.

Short term I see a nice 5 wave decline and overlapping corrective bounce afterwards.  If my count is correct in both the longer term and short term counts, then the euro should be selling off hard soon.  This also lines up well with my top count for stocks as well which also projects a solid decline coming soon.

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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.