This Elliott Wave blog is dedicated to sharing Fibonacci ratios and other technical analysis for forex signals, index futures signals, options signals, and stock signals. Elliott Wave Principle puts forth that people move in predictive patterns, called waves. Identify the wave counts, and you can predict the market.
Stocks had trouble getting off the mat to follow through with yesterday's big end of day rally. Markets flip flopped in and out of positive territory all day but closed in the green. This was the result of a somewhat fractured market though since it was primarily technology and banks that pulled the market higher today from what I saw. Volume was quite strong for a Friday rally at 1.2 billion shares, but still much lighter than what we've seen on declines the past several weeks. More importantly, like I said earlier, the market rally was fractured internally with only 67% of total volume to the upside. Far from impressive after a big hopeful surge in late day trading yesterday for the bulls. An accross the board buying spree with solid volume would give the bears some pause, or should I say "paws" (get it? a play on words there: pause = paws. Yeah I know, it was stupid). Anyway, so far, this rally is starting off looking corrective. So if we get higher levels I'll use it as an opportunity to add short.
The larger trend is firmly down so the market can fall through the trap door at any moment. I have little doubt that the market will break below 1100 soon. It looks like wave (ii) is a bit shallow right now but it's worth at least noting that it has stalled at the 23.6% fibonacci retracement level at the moment. This is not a common stopping point for second waves. They are usually much deeper. So if we look higher we see a convergence of two key indicators at 1167 in the open gap and 50% fibonacci retracement. If the market wants to carry higher early next week, I'll be looking at 1167 for a potential resistance and reversal point. Seeing signs of the rally faltering in that area would be a good signal for me to add to my short position.
As for the euro, it too appears to be correcting in a choppy overlapping move higher right now. The larger trend still appears to be down so I'd be shorting into rallies.
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.
Internals today were very bearish indeed. And I'm sure that's little surprise considering the market's price action today. 1.7 billion NYSE shares traded today which is substantially higher than what we've seen accompany the rally the past few weeks, and 95% of total volume was to the downside. Clearly an overall across the board bearish today. But looking at the bigger picture for proper wave degrees is key here. Although today's internals were solidly bearish, they are not nearly as bearish as what we saw in Minor wave 3 down. This further strengthens the current wave count we're tracking which suggests the current decline is a Minor wave 5 since EWP states that 5th waves are often accompanied by reduced momentum compared to the previous 3rd wave at the same degree.
The S&P declined in 5 waves into today's low suggesting a relief rally is possible tomorrow. Although I would definitely not get long here, I'd just prepare for a quick wave (ii) rally possibly. The S&P also paused near the end of Minor wave 3 as well as round number support at the 1100 area. I have little doubt this level will be broken soon so any rally we get Friday or Monday would be a good opportunity to add short in my opinion, as long as the wave ((ii)) high is not broken.
The S&P broke beneath the wave ((b)) low proposed in the triangle, negating the triangle the way I was recently counting it, and most likely negating the triangle count overall no matter how you want to count it. The Dow and S&P have broken the series of higher lowers this morning suggesting their downtrends are back underway. The Minor wave 3 low has not been broken so stocks should fall further. There's always the possibility that the markets are just undergoing a complex triple zig zag which means more rallying on the way, although I very much doubt it. Either way, with the Dow dropping almost 700 points in less than two days be prepared for a possible relief rally soon, I'm favoring the short side until we get a new low beneath Minor 3 regardless.
The financials have already broken down to a new low, perhaps leading the overall market like they often do.
1.4000 has been an important support level for the euro in the past so I thought it would do a better job testing its underside before resuming its downtrend. It didn't even touch 1.4000 before it topped, reversed and made a new low. Perhaps a sign of how strong the current downtrend is. The larger trend in the euro still appears to be down, I see no reason to abandon the short side.
(Video) Bob Prechter Explains 'Triple Top' Forming in U.S. Stock Market
This excerpt from the special video issue of the August Elliott Wave Theorist brings you Bob Prechter’s analysis of the triple top that has been forming in the U.S. stock market over the past 12 years. Watch as Bob himself explains what this pattern means for you and the markets.
You can get even more analysis – including an 84-year study of stock values – that will help you gain perspective about the recent market moves with Elliott Wave International’s FREE report, “Reality Check: Studying the Past to Bring Clarity to the Future.”
You’ll get a glimpse into the in-depth analysis Robert Prechter presents each month in his Elliott Wave Theorist with 3 excerpts from his most recent issues.
Don’t let extreme market volatility leave you confused and scared. Prepare yourself for today’s critical market juncture with your FREE report from Robert Prechter.
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.
The triangle scenario is still intact although my confidence in it has weakened. The market held up Friday and although it declined hard yesterday, it did so on light volume (about 900 million NYSE shares). The Fed meets today (whoopie!) and talk tomorrow. The market should be a bit whacky this week as a result. There are numerous corrective options for this rally since the Minor wave 3 low and going over all over them would be tedious and pointless right now and just be a distraction. The triangle above is only one of the options and I still hold it as top choice. The bottom line is that 1258.07, the Minor wave 1 low, should remain intact no matter what correction is actually underway.
The euro continues to correct. Sunday's down gap appears to have been filled today, opening the trap door for further declines in the euro. The larger trend remains down but the short term corrective trend is still up for now.
(Video) Bob Prechter Explains 'Triple Top' Forming in U.S. Stock Market
This excerpt from the special video issue of the August Elliott Wave Theorist brings you Bob Prechter’s analysis of the triple top that has been forming in the U.S. stock market over the past 12 years. Watch as Bob himself explains what this pattern means for you and the markets.
You can get even more analysis – including an 84-year study of stock values – that will help you gain perspective about the recent market moves with Elliott Wave International’s FREE report, “Reality Check: Studying the Past to Bring Clarity to the Future.”
You’ll get a glimpse into the in-depth analysis Robert Prechter presents each month in his Elliott Wave Theorist with 3 excerpts from his most recent issues.
Don’t let extreme market volatility leave you confused and scared. Prepare yourself for today’s critical market juncture with your FREE report from Robert Prechter.
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.
