Stock Bulls Still in Control; Euro Bulls as Well

A lot of volatility today, but in the end nothing really happened as the market closed about flat on the day.  The weakness in the morning looked like a nice start to some bearish control and perhaps solidifying the call for a top.  But obviously the bears lost their footing and gave up to a big rally into the close.  Internals don't tell me much as it's all pretty normal and in line with the closing prices in the indices.  So as far as the internals go, it tells us nothing as to what the short term trend may be.  However, price action does lend itself to the bullish side at the moment.

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I've been showing this chart above comparing the Dow with the S&P and Nasdaq 100 the past few days to show the diverging behavior.  My thesis is that when investors flee higher risk assets in the S&P and Nasdaqs and go to safer assets that are in the Dow, it's often a warning sign of fear re-entering the market and that a selloff about to come.  So far the market has held up real well and it doesn't appear it's done rallying for the moment though.  So I don't know how much longer this chart will be worth showing.  But at the moment, the divergences are still in place, so this chart still has value. 

As for the wave count, today's rally in the S&P was strong and closed on the highs again today.  However it is still below last week's high of 1296.06, unlike the Dow, so as long as that divergence is in place we should keep an eye out for a top.  The wave count is unclear as a series of 3 waves have been flopping all over the place and last week's high is in shouting distance of being taken out, negating the call for a top already in place.  Aggressive traders might want to consider getting short now with a stop just above 1296.06, but I'd rather short on weakness here, so I'd put a sell stop just beneath today's low.

I know this post may seem confusing when looking for solid direction of the market.  But I don't see it right now.  It's a mixed picture and I'm just calling it as I see it.  And the bottom line is that the stars were lined up for a top to be in place for the past week, and a couple times it appeared the bears were entering to take down this market.  But they have failed SO FAR.  At the moment, it feels like the market wants to go higher, despite the bearish evidence to the contrary.  We'll see if the volatility surrounding the Fed hype clears things up.

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Nothing has changed with my outlook on the dollar.  It's still a mixed picture with the AUD looking very weak and declining impulsively on the 2 hour chart, but the euro seems indistructable and keeps surging higher.  The euro is not sporting a clear wave count in either direction, but the AUD is, so I'll focus on it.  If the wave count above is correct, the aussie should be headed much lower and real fast at any moment.  This should also result in a euro decline (US dollar rally). 

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.