Nothing Changed for Stocks; Euro Bears Happy

I wish I had something interesting to say today but I don't.  Nothing has changed for stocks and nothing signficant has occurred worth noting right now.  Volume barely stayed above 1 billion shares on the NYSE, so interest has really trailed off this week.  I'm still waiting for the sharp move that should be right around the corner.  My guess is that the move will be down.

I'm just posting my primary count here which calls for a sharp impulsive (c) wave lower at any time now.  My alternate count from yesterday is posted here.  I do feel the market is gearing up for a sharp move, and the evidence suggests that the move will be to the downside.  But as long as 1129.24 remains intact, I'd view any decline as part of a larger correction. 

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The euro continued lower last night in the European session, giving the bears some relief for the time being.  A series of lower highs and lower lows has been established, but they are ovelapping waves at the moment, so caution is still warranted for the bears.  As long as the euro stays below 1.3325, I feel comfortable remaining aggressively bearish.  But a break above that level will get me to cover some of my shorts.  I'll cover ALL my short positions on a break above 1.3785.

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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.

Stocks Still Look to Decline Soon; Euro Bears use Caution

Other than precious metals, there’s nothing exciting to report today and nothing has really changed from yesterday other than some added risk for the bears in the euro.  Internals today were average, with volume at 1.1 billion shares and slight bullish bias; a bit more than what I’d expect for such a flat close today.  This is essentially the opposite of what occurred in yesterday’s flat close that had a strong bearish bias internally.  So maybe things evened out a bit today.

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The above two counts remain my top choices right now.  The flat correction for Minute wave ((iv)) is my preferred count, and Minute wave ((iv)) already complete and Minute wave ((v)) finishing up right now as my alternate count.  The action in the coming days should help us remove one of these from top contention.  Ultimately, 1129.24 is key for the bulls.  A break below that level would signal that a major top was likely in place.  Until then, we just have to do the best we can in maneuvering the short term gyrations of the market.

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The euro’s action is getting me concerned a little as a bear here.  On the daily chart you can see that so far the decline is only 3 waves, which just a correction.  But that will only be confirmed with a rally above the Minor wave 2 high at 1.3785.  Recently, we had a Minute wave ((ii)) complete and another wave i and ii decline follow.  Now the euro looks to have hit a floor today, so the next sharp move to a new extreme will be telling.  Like I’ve said many times though, when I have to label my wave count with a lot of waves 1s and 2s only, then it’s most likely wrong.  We’re starting to fall into that category now with the euro.  Nothing’s confirmed though yet since no new highs have been made, but once a new swing high is registered, sound the alarms.  This means the larger bearish case is rapidly and protecting gains is paramount to trying to grind out more future gains.  So I’d like to see more selling enter this market soon to new lows so I can regain confidence in my bearish counts here.

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Aside from the downtrend of lower highs and lower lows still intact, another reason I want to remain bearish the euro is the action in precious metals, specifically silver.  Silver has really surged this year and has shot significantly higher now for the second time and reversed.  Looking at the daily chart you can see what I’m talking about.  Also notice that the RSI is not confirming the new highs, probably due to the fact that the rallies have been so quickly reversed.  But it seems that silver and gold are forming tops that may last a while.  If so, I’d say it’s likely that the euro will be under pressure as well. 

My make or break point for the bearish euro case is the Minor wave 2 high 1.3785, but breaking above any previous swing highs on its way up to the level will still get me to start reducing my position size.

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.

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.

Market Set to Decline; Euro Needs to do the Same to Keep the Confidence in my Wave Count

Internals today were as exciting as the price action in the markets.  But there were two things of interest that lend themselves to the short term bearish case in my view:

1) volume was extremely low at 800 million shares on the NYSE which tells me that interest in buying the market at this point in the rally has dissipated drastically.  This leaves the bulls fully exposed here for a gut punch from the bears, if the bears decide to come in here and flex some muscle;

2) the S&P decliners were at 300 today while the market’s price was only slightly down.  I expected a more even advancer vs. decliner ratio with the closing price today.  So again, it appears the bulls are a bit exhausted here and it leaves the bears some opportunity here since they seem to be gaining some momentum in the background.

From a price action and internals perspective, the market rally appears weakened and ready for at least a short term pullback to recharge the bulls.  The market has a rolling-over look to it, and the internals suggest a lack of buying interest at current levels.  But if the bears don’t come in and strike real soon, it will embolden the bulls and surge the market higher as a result.  So tomorrow or Wednesday we should see a sharp move; and my guess is that the move will be down.  How far it drops will help us determine the longer term wave count, but I still think we’re probably in a Minute wave ((iv)) triangle right now.

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Minuette wave (b) should be over at current levels.  A break above the Minute wave ((iii)) high would severely damage the triangle outlook and suggest that probably a flat correction is occurring for Minute wave ((iv)) instead.  The market price action and internals suggest that the market is vulnerable to a bear takeover here, if the bears decide they want to step in. 

If we’re in a triangle, then the market should decline with modest strength to around the 1190 area for Minuette wave (c). 

But if we’re in a flat, at least one index should make a new high above Minute wave ((iii)) and then all the indices should sharply reverse in an impulsive decline for Minuette wave (c) down to the 1160s before bottoming.

So we’ll see which one plays out.  With the holiday season upon us, I’m not expecting any big sustained moves in any direction in the coming weeks.

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The action in the euro last week was a bit concerning.  Right now we only have 3 waves down from the highs which I’m labeling Minor waves 1 and 2, with Minute wave ((i)) and ((ii)) probably complete now.  This is a bit of a problem because with only 3 waves down from the highs, it leaves my impulsive wave count down very vulnerable here.  And now that Minute wave ((ii)) is greater in size than Minor wave 2, it casts some serious doubt about the wave count I have right now.  Waves of smaller degrees should not be bigger in size.  But the key word there is “should”.  This behavior doesn’t violate any EWP rules but seeing as that it does violate a guideline, we need to be vigilant in protecting our short position.  We’ve made a lot of pips on this euro short trade and I’m not going to give them all back because I couldn’t stay objective.  The euro needs to resume its downtrend very soon to eliminate this doubt in my wave count calling for immediate lower levels, but I definitely do not want to be short if it rises above the Minor wave 2 high.  I will stop out above the Minor wave 2 high.

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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.