Internals today tell us that this market is still flip-flopping around with an upward bias on light volume. Today’s volume was greater than yesterday’s, but still very light overall at only 804 million NYSE shares traded today. Once volume comes back into the market, we should have more confidence in riding a trend for a few days at least.
The S&P is not only moving higher on low volume, but also on diverging relative strength as seen through the RSI above. This paints another picture of weak momentum on this move higher. But, the market can still float higher on this weak momentum just as it has done the past several days, but if we get a big volume spike on a nice reversal day to the downside, or accompanied with an impulsive decline, then I think it will be a golden opportunity for nice short trade. So I’m still waiting and watching for the next big move on high volume.
Learn Elliott Wave Principle
If we put EWP aside for a moment and just look at the behavior of volume lately we can see what should be a concerning picture for the bulls. Above is the S&P SPDR the SPY. Notice how volume increased with the SPY’s decline, then fell off sharply when the market rallied. This tells me it’s probable that the larger trend is probably still down despite this long rally we’ve had the past couple weeks. So this is one of the things I’m watching that has me all over this volume issue.
Still Enough Time to "Conquer the Crash"
The euro hasn’t done much all this week. I think the risk/reward lies with the bears here so I’d be short against 1.4219. At this point, a break above 1.4219 would make the decline from the highs on this chart a 3 wave move which is a correction, and point to higher levels for the foreseeable future. So staying below 1.4219 keeps the bearish view intact with substantial rewards possible if the larger downtrend has in fact resumed.
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.
2 comments:
what do you think of the ABC being a wave 1 down in a leading diagonal and what you have as an X as wave 2 - Have seen people with an expanding - then a deep retrace into what people will consider the coming of QE3? Thanks
Hey TD, I don't think a leading diagonal would be a good way to label the decline since the decline is a quite clear 3 wave drop, and ending diagonals are 5 wave moves.
I tend to take the simplist approach at counting waves since I believe the simplist count is often correct. I think trying to count this as any type of diagonal this early in the move is like trying to shove a round peg in a square hole.
The way I see it, the drop is 3 waves and I think we should consider it a correction until the market proves otherwise.
Thanks,
Todd
Post a Comment