Thursday's Action - Stocks Working Lower; Euro May be Topping

The S&P is moving more as less as planned so there's not much to add from my last set of comments.  The S&P carried higher to the maximum comfortable retracement level at 78.6% fibonacci at 1197 before reversing sharply.  Yesterday's decline was much stronger internally than the preceding rally the day prior suggesting the larger trend is down.  Today's big rally should fade away by the end of trading.  The Nasdaq has been traversing in and out of negative territory all day despite the Dow being up triple digits all day. This is a telling sign that favors the bears.  Rallies are weaker internally and fractured whereas declines are internally strong to the downside and moving uniformly.  That's bearish.  And the wave count above suggest big moves lower if it's correct. 

Even though the structure right now may not be ideal for the resumption of the downtrend being underway, this type of imperfect movement is typical for 4th and 5th waves, i.e. 4th waves are often very choppy and unpredictable, and the following 5th wave can be even more unpredictable and imperfect.  We have been seeing that play out the past few weeks.  Yesterday's high should not be broken so I'm shorting into rallies against yesterday's high.

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I thought the euro would charge toward 1.4000 again before topping but it's possible a top is already in, at least in the short term.  There's a near head and shoulders pattern in place now, but besides it not being textbook it still tells the same story, a rally that is in trouble.  I favor the short side here against 1.3700.

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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 on Fire, Will They Cool? Euro Correcting 5 Down

Today's internals give me a mixed conclusion on what they represent to the short term action.  However price action suggests a possible reversal is at hand with today's late weakness.  If the bearish count I posted this morning is correct, then today's high should remain intact.  Regardless of the wave count at this point, with today's high being the risk level to stop out at, I'd be shorting into any rally I get tomorrow morning with a stop just above today's high. 

THIS MORNING'S POST IS BELOW:



As you all know from my last post, yesterday's rally was expected.  And I thought we'd get another pop today to the 1167 area I cited as well.  But today's action blasted right through 1167 like it wasn't even there.  Now, 1180-1197 marks the reversal area I'm watching now.  I see no weakness in the rally so far, but this is a 2nd wave and they are often very strong and fool us into thinking the trend has reversed.  Only a break above 1197 would be concerning, a break above 1220 would negate the bearish count you see above.

Read Excerpts From Robert Prechter's Newest Theorists in This Free Report.

The euro appears to have completed 5 waves down and is now correcting higher.  I'm looking for the euro to possibly push to just above its prior 4th wave high to the 1.4000 area again before it tops and reverses lower.

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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.