The S&P and Nasdaq 100 pushed to new highs, breaking the EWP count once again. The Nasdaq Composite and the Dow have not made new highs but should do so shortly. If not, it will leave an intermarket divergence in place, and when accompanied by waning momentum, volume, and the Dow Transports failure at a new high, it would spell disaster for stocks in the short term at least. If all these markets confirm the highs in the S&P and NDX, then look for continued rallying for the foreseeable future. There are no signs of a top here, just steady buying in a light volume market where the Fed is buying futures and pushing brokers to buy up the market (enter conspiracy theory here). It's tough to fight the government, so for the most part I choose not to. I see no reason to get short here in anything other than a tiny options position where my risk is clearly capped and with the understanding that it is basically just a gamble which I rarely do. Momentum is just so weak on this rally that this market can give way at any point, so I don't want to get long. I think it's best to just wait it out until evidence presents itself to take a position, or simply put money in other markets that I can better analyze and project. Like the euro:
Sentiment Measure Shows No Fear of Major U.S. Stock Decline
The EUR/USD thrusted from a triangle last night, and judging from the structure preceding the triangle, it looks like the triangle was an ((x)) wave (according to EWP, a triangle only occurs in 4th, B and X waves). That means the thrust higher right now is a wave (a) which will be follwed by a pullback to around the ((x)) wave triangle apex for wave (b), then one more final rally for wave (c) of ((y)) where the EUR/USD should form a major top. Fibonacci retracements and the prior 4th wave converge around the 1.2700-1.2800 level (my lines on the chart above are not exact projections), so I'll be looking for a reversal in that area to establish short positions. Keep in mind that the larger trend is firmly down though, so surprises will be to the downside.
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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.
2 comments:
I think the selling we saw at SPX1424 was a good tell for failure to launch. I've been wrong all along as I thought we would turn down at the DOW pivot of 12,750, but the FED had other ideas as you alliterated quite well.... BUT, the reversal was pretty impressive, the VIX got above 15, and as we get closer to "The Beard" announcing no QE3, ECB is still a clusternut, I am still.....calling for a drop to DOW 12,100-12,350 by September expiration. I will add folks way smarter than me at Nomura Securities warned of a turn at 7:30AM EST today, and are calling for a very sharp drop all the way to the November elections, AND it was the same analyst who called the recent rally, so it's not some perma-bear or doomsdayer. And there was that huge butterfly put spread initiated days ago. Just sayin'.......
Lol, "The Beard", haven't heard that one yet, lol. A Goldman Sachs analyst projected the same market action through the rest of the year. A friend sent me the article: http://finance.yahoo.com/news/goldman-sachs-dump-stocks-fiscal-141901421.html;_ylc=X3oDMTNuc2xuY3NtBF9TAzExODMzMDAyMjYEYWN0A21haWxfY2IEY3QDYQRpbnRsA3VzBGxhbmcDZW4tVVMEcGtnAzVlMjQwYjFiLTJmNzgtMzEwMC1iMDNjLTk1ZTBhZjcwYzBhMARzZWMDbWl0X3NoYXJlBHNsawNtYWlsBHRlc3QD;_ylv=3
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