Stocks Look Bearish but Dow Might Eek a New High; US Dollar Looks Strong

Internals today don't tell us much but that some extra volume hit the market today, probably explaining the volatility on the day.  Down vs up volume was slightly bearish but there were quite a few more decliners than advancers (721) on the NYSE.  Although the bears couldn't follow-through with more selling pressure this afternoon, the bulls were unable to get the main indices in the green despite the late day push.  The internals and price action still suggest a bearish market right now.

Again the higher risk tech stocks, as illustrated here through the Nasdaq 100, is outpacing the high caliber blue chip stocks in the Dow to the downside this week.  To me, this illustrates some fear in the market since folks are ditching their higher risk assets and moving into lower risk assets in the Dow.  The S&P, and pretty much all indices, are outpacing the Dow to the downside at the moment, suggesting at least a short term flight from risk.  That's bearish for the market moving forward through the next few days at least.

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The one slightly bullish piece of evidence I see is the choppy decline in the Dow.  The Nasdaqs and S&P appear to be declining impulsively, although it's too early to get married to a count on them yet so I won't bother posting them yet.  But to see my longer term wave count I posted a few days ago, click here.  But the Dow's price action is clearly corrective.  That suggests that at least the Dow will make a new high before the overall market continues selling off.  This is not a requirement, in fact today's push higher in the Dow that failed to make a new high may be a truncated 5th wave.  However those are extremely rare, so don't count on it, just be mindful of it.  The best case scenario for the bears would be to see the Dow eek out a new high tomorrow without the S&P and Nasdaqs following along, then the market reverses to the downside with that divergence in place.  But regardless, without over-projecting the technical movements of future price action, the market looks bearish right now and any rally in the S&P that's capped at Tuesday's high would be a good shorting opportunity in my view.

The AUD/USD held up to yesterday's expections in that it topped out at the 61% fibonacci level and then sold off hard.  I'm unsure of the larger wave count so please don't hold me to the wave degrees at this moment.  The euro, on the other hand, also held up to yesterday's expectations by doing its own thing and not tracing out any clear patterns in the short term at all.  So if we go to basic technical analysis we see the euro having trouble getting through previous resistance at the 1.3460 area.  And the latest short push to a new high has not been confirmed by the stochastics and RSI.  When you add this together with the structure of the AUD/USD, it still has a bearish picture for the euro.

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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.