Stocks About to Explode, Play the Breakout; Euro Dropped in 5 Waves

The market did nothing today as far as price action goes as it continued to consolidate in a tighter and tighter range, typical of a triangle pattern.  Volume also continues to decline as the range in price gets tighter, also typical triangle behavior.  Other than that, nothing of note to report.  The price action and internals suggest a triangle is finishing up and will result in a sharp breakout.

Above is the 4th wave triangle I talked about yesterday.  This scenario now seems more likely after today's very tight range on light volume.  It's certainly not the perfect triangle, but more subdivisions in the coming hours/days may make us adjust the labels a bit.  But the end result will be the same, i.e. a sharp thrust to higher to a new high on the year.  Adhere to the levels I mentioned in yesterday's post for my opinions on guidance to trade with.

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EWP states that triangles only occur in 4th, B and X waves.  Since I've already discussed the 4th wave, and the X wave is almost impossible here, I thought I'd show the B wave triangle.  Here we'll see a sharp thrust lower for wave ((c)) which will probably end the downward correction and lead to new rally highs eventually.   I'm unsure how this fits into the bigger wave count so I'm not considering it yet.  But it is something to be mindful as we move forward, just in case we get a sharp downward move, those of us waiting for a big 3rd wave here should keep this count in mind in order to keep us honest while trading.

Again, the 1-2, 1-2, 1-2 count is still on the table but less likely.  We should soon get a sharp thrust in either direction and it will help us eliminate one of the above counts.  But the tightening action of price and volume suggest a big breakout either up or down is about to occur, so being setup to take advantage of a sharp move in either direction seems wise here.  Option players might want to think about a "straddle" here.

The euro followed my forecast yesterday for one more new low to give us a nice 5 wave decline from the high.  So far my gut instinct has paid off and now we have solid EWP evidence a top is in.  I'm a seller on rallies as long as 1.4035 remains intact.

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: To Triangle, or Not to Triangle; Euro Almost Completing 5 Waves Down

Internally the market was very bullish today in and of itself, however volume was very light and it did not match the bears’ intensity to the downside yesterday. Today the NYSE had 1,526 more advancers than decliners while yesterday had 1,608 more decliners than advancers. Today’s S&P advancers over decliners were about the same as yesterday’s so that’s a neutral result. Volume on the NYSE’s down-day yesterday was 1.03 billion shares while today’s up-day was only 987 million shares. Also, price today did not recover all losses from yesterday. So the bears held on to slight advantage by the skin of their teeth.

The aggressively bearish count above is not looking good from a probability standpoint. There are just too many wave 1s and 2s in place. From my experience, when I start counting a lot of 1 and 2 waves at various degrees it’s because I’m going against the trend, and trying to justify choppy price action with 1 and 2 waves. Although the above count is sound as far as EWP is concerned, it seems a bit unlikely. Only a very aggressive shot lower tomorrow, while not breaking above 1327.68 in the morning, would move this count up in probability.

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The above count suggests a triangle is underway, and it would definitely explain the very choppy sideways nature of this market lately. Without breaking out to a new low or new high for about two weeks now, it makes this count more likely. A break below 1302.58 would put this count in severe jeopardy, while a break below 1294.34, or break above 1332.28, would completely eliminate it.

So to give you the bottom line, in order to take a position short term we need to know what the possibilities are, and I listed the top ones above. Staying within the levels I mentioned the triangle requires means that a very sharp shot higher to new highs on the year will be on the way once the triangle is completely. Of course, we’d like to get long with a stop just below 1302.58 or 1294.34 (depending on risk tolerance) in anticipation for the shot higher. However a break below 1302.58, and especially 1294.34, would eliminate the triangle and make the more aggressively bearish count more likely and therefore suggest a short position is preferred.

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The euro continued to fall last night as I would have wanted it to after taking a bit of a gamble on a short term short trade once I saw some subtle topping behavior yesterday. Even though we only have 3 waves down so far from the high, we only need one more new low to make the decline 5 waves. Doing so would be solid evidence that a top was in place and that we should favor the short side indefinitely. A break above 1.3956 before making a new low would cause some overlap and make this count invalid.



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.

Bears Showing up for a Fight; Euro Shorting Opportunity for Aggressive Bears

I'm very short on time but am posting this since some significant developments occurred today. 

Internals were very bearish again today, and on a Monday no-less, which has traditionally been owned by the bulls.  The internals weakness along with some small 5 wave counts on the smaller timeframes and the breaking down of 1312 at today's close make it an interesting play for the bears here.

1312 was taken out today at the close, erasing that big bullish surge last week and triggering a short position on my part.  Under this count above, a series of 1s and 2s are unfolding and should soon give way to a wave 3 at several degrees which essentially means a sharp almost straight line down.  As long as 1327.68 remains intact, I feel comfortable being short here, a break below 1294.26 will make me extremely comfortable.

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The alternate wave count that I'd like to see eliminated very quickly is the bullish triangle scenario above.  Under this interpretation we'll see more up-down action for a net sideways move that will result in a sharp thrust higher to new highs on the year.  A break below 1294.26 will negate this triangle and get me even more short this market.

EURO

As for the euro, today's reversal looks nice but didnt' really break any key levels or support.  But the action in the AUD/USD and GBP/USD on the other hand, looks very bearish.  I took an aggressive stance and shorted the euro on today's weakness against the recent highs.  With stocks looking poised to possibly fall hard and the euro overbought, I thought I'd take a shot.  But right now this is more of a calculated gamble with a very small position rather than calling a solid top and putting in a big long term position.


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.

Waiting for the Breakout in Stocks; Euro Still in Bull Mode

Thursday I said that the bears needed to get to work Friday if they wanted any chance to take over this market in the short/medium term.  They did in fact make an attempt and pushed the market down hard but failed to match the internal intensity the bulls had the day before, and failed to convincingly erase the bulls' gains or take out a key level.  So although the bears made a valiant attempt to roar back, so far it has failed to result in anything to convince me that they've taken back control of this market.

I want to see the 1312 level taken out and closed beneath in order for me to get short again.  That's the breakout level from Thursday that started the surprise bullish run up to a new high.  If the bears can get a close beneath 1312 it will tell me that the run higher was just a correction and that all that bullish momentum behind it was erased and that it was a failed push higher.  That would indeed get me bearish and short again.

However, if the 1332.28 level is taken out to the upside then that might get me bullish and long this market for a very short term trade.  The bears have failed to convincingly reclaim this market, and the bulls have really taken the reins and pushed this market higher so a new high above 1332.28 will erase all doubt in the uptrend in my view and get me long for the short term.

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The euro keeps pushing higher and I see no evidence of a topping process occuring.  So the euro's uptrend remains well intact.  One thing to be aware of is that the 4hr RSI is at a level that has previously marked tops as you can see from my chart above.  This doesn't mean that the euro will top right now though.  All it means is that it's starting to get a little overbought, and longs should be cautious and alert here.  Since the larger trend is still down in my view, I'm simply waiting for signs of a top to get short.

Breaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends



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.

Looking for a close below 1312 to get short again.

Bulls Gut Punch Bears, Obtain Full Control of Stocks; Euro Looks Higher

The market rallied today as expected. But it rallied much stronger and higher than I expected. Does this look and feel like a Primary wave ((3)) decline folks? Not to me. But let’s focus on the short term since that’s the best strategy in my view. Internals on this rally were extremely strong, the bulls had full control from the start of the trading day to the end. Advancers and up volume crushed the bears today and total volume was also solid. It’s days like today that often put a floor in the market for days/weeks. So be ready for more upside if the bears don’t show up Friday.

The major indices made new highs today so I’m on the sidelines again. Only a big time bearish reversal to the downside Friday that erases what the bulls did today would get my attention again on the short side. But right now, the bulls have control. Tomorrow will be an important day for the markets.

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Since the market did not break above February’s high, the bearish count technically remains intact. However my experience tells me it’s extremely unlikely this count will pan out, unless the market tanks hard tomorrow to erase today’s bullish move. The correction for Micro wave ((2)) is now too long and deep for my comfort, and the fact that the bears flexed their muscles last week and created all kinds of bearish evidence and yet still could not defend this week’s highs tells me the trend is still up.

So it’s quite possible the decline last week was a Micro ABC, and this week’s action is part of a 1-2 sequence (i and ii). We’ll know soon which count is correct. I’m on the sidelines for the moment, but follow through higher tomorrow would probably get me in on the long side.

Last week I showed this chart with the big daily bearish engulfing candle. Today you can see that this bearish formation has now been erased. It blows my mind how many times the bears get great setups in wave counts, optimism, momentum, and basic chart studies and yet the bulls come in and erase them all with ease in short order. But hey that’s the market, and that’s also a sign that the trend remains firmly up. I’m not getting in this market’s way on the short side unless the bears can step up Friday.

Breaking News Bulletin: News Is NOT the Main Driver of Stock Market Trends

The euro has been flip flopping all over the place with 3 wave rallies and declines for the past several months now. The big strong moves the past couple days and new high this week leave me thinking 1.4250 will be challenged and broken soon as well. The decline from that area a few months earlier looks more like a 3 wave move than a 5 wave move, so I think that area is vulnerable to be taken out at the moment. With the longer term trend still down I don’t like getting long here, but I’m certainly not getting short here while it’s in full bull mode. So much like stocks, I’m on the sidelines for now.


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 Correcting; Euro to Fall any Time

The market had trouble finding its legs today, but with 5 waves down possibly complete right now, the floppy nature of the price action and internals closing quite favorable to the bulls on a flat day, I’d have to say that we’re probably in a bullish correction sequence here, possibly for the rest of the week. Volume was a bit light at 1.02 billion NYSE shares, but despite the bulls’ lack of momentum and the flat close on the day, there were a lot more advancers than decliners on both the NYSE and S&P. Plus, up volume well exceeded down volume on the NYSE. Not exactly a show of force and control by the bears if the short term downtrend is still intact. The internals’ data suggest we’re probably in an upward correction right now that may last a day or two.

The wave count supports what the internals are telling us. With 5 waves down counted complete, we should get a series of 3 wave moves to complete Submicro wave (2). Right now the 3 wave rally that just completed is too small in price and time to make it likely to have completed Submicro wave (2). Plus with the internals still strong, it suggests more subdivisions higher. I’m projecting a “combination correction” in the form of at least a WXY at the moment. This should take us to the end of the week and possibly early Monday. 1332.09 remains the key level for the short term bears in my view. That level must remain intact for us to have strong confidence that a longer term downtrend is underway.

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The euro finally made a new high. I want to stand aside and wait for signs of a top and reversal before I attempt another short position. The larger term trend is still firmly down, but the short term trend appears to be up for the moment. Waiting for the short term bulls to give way to the long term bears again seems like the best option at the moment.


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 Evidence is Strong that the Stock Downtrend has Resumed; Euro Looking Vulnerable

The market fell hard most of the day suggesting Micro wave ((3)) is now underway. Volume was solid at 1.2 billion shares on the NYSE, but not jaw-dropping. Nonetheless, down volume crushed up volume, there were 1,574 more decliners than advancers on the NYSE, and 427 more decliners on the S&P. So quite a bearish day internally, and after a trailing off bullish push the past couple days, it looks like today’s action was a sign of a trend change to the downside now.

The S&P stopped just shy of the 78.6% Fibonacci retracement level I mentioned yesterday. The target level I wanted to get short was between 1315-1320, and anything above. So far, that call is in the profit. I would like to have my stop just above today’s high. But more conservative traders might want to keep their stops just above 1344.07 until we get a new low beneath 1294.26.

In reference to last week’s lows in stocks, Monday I said, “The Nasdaq Composite did not confirm the last new low in the Dow and S&P and the market has been in rally-mode ever since. I'll be looking for another such divergence, only reversed, to mark a top.” Today we got that divergence I was looking for. You can see from the red lines on my S&P and Nasdaq charts (blue lines mark the divergence at the low). Divergences like these often accompany reversals in trend. So here’s another check market to put in the bearish column.

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As you can see above, the Dow, S&P and Nasdaq Composite all topped out between their 61% and 78% Fibonacci retracement levels. These two levels are textbook EWP typical stopping levels for second waves. So again, the evidence mounts on the bearish side.

Lastly, today’s daily candlestick in the S&P created a huge bearish engulfing pattern where today’s high was above the previous candle, and yet today’s close was below the previous candle’s intraday low. This pattern often occurs at reversal points as well.

So there you have it, on a silver platter….ready for the bears to gobble it up. Nothing is guaranteed in this business though, it’s all about probabilities. And right now the probabilities definitely favor the bearish side. So I would still trade cautiously and with a solid risk management plan. No matter how good the setup is, it can still be wrong…..plan accordingly.


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Still no new high for the euro, yet the US dollar has made a new low. Looking at how weak the euro’s price action has been this week, supplemented by the diverging RSI on the 4 hour chart, it looks like this pair might not make that new high. But I don’t want to jump the gun here since I don’t have any evidence of a top in the euro. So I’ll wait for a close below 1.3700 before I get short again. But looking at the price action here and the overstretched rallies in oil, gold and silver, I think a close below 1.3700 will happen sooner rather than later.


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.

Stock Rally at Good Reversal Point; Euro Still Has New High Ahead

The market has rallied as expected.  The Nasdaq Composite did not confirm the last new low in the Dow and S&P and the market has been in rally-mode ever since.  I'll be looking for another such divergence, only reversed, to mark a top.  Above you can see the wave count and that the S&P is in between two common fibonacci levels for 2nd waves to stop at (61% and 78%).  Internals today are still quite strong but it's too early to just give it all to the bulls the rest of the day.  I'll be looking for signs of a reversal both internally, and in the price action today.

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The Dow on the other hand is having trouble getting above its 61% fibonacci retracement level suggesting this index may be topping right now.  I don't see any other signs of that at the moment though, so this behavior here is simply just something to watch at the moment.  The S&P might want to push into its 78% retracement level which should get the Dow to a new high on the day, so calling "top tick" here doesn't seem wise.  But the behavior both in price, internally, and momentum is worth watching in the indices right now since they are in fact at levels that normally market tops and reversals if the larger trend has indeed turned down.

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As I've said before, the euro is not tracing out clear elliott wave patterns so I'm stuck with the basics on this pair.  Seeing a 3 wave drop 1.3863 it is clear that at least one more new high above that level must be achieved before looking for a top and reversal.  The pair made it within pips of making that new high last night, but so far is left just shy of doing so.  I still think we'll see another push to above 1.3863, although coming below 1.3700 would put that into some doubt.




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.

Bear Momentum Very Weak, Bulls Should Make a Comeback Attempt; Euro Headed Above 1.3861

The internals today show the momentum waning for the bears inside this market.  The bearish intensity continues to decrease with every passing day.  For example, here are the amount of decliners exceeding advancers on the NYSE:

Tuesday = 2364 more decliners
Wednesday = 897 more decliners
Thursday = 204 more ADVANCERS

Here are the percentages of selling volume out of total volume:

Tuesday = 89.7%
Wednesday = 64.8%
Thursday = 57.1%

So you can see the declining bearish strength as the week moves on, and with the wave count mature at a Micro degree level, it suggest the bulls have a chance to strike here and shoot this market higher short term.  Now this is merely a momentum analysis, and the above data along with the RSI show that momentum is waning, but that doesn't mean the bears can't come in and smack this market down.  Momentum is a backward looking indicator.  But it does offer us a clue as to how strong the current trend is and whether we should lighten up on our positions or not until the bearish momentum can re-enter the market.  My money often goes with the largest herd, as that herd gets smaller and smaller, so does my position size.  Right now the bearish herd has become quite small, from a momentum perspective.

This is my preferred count, although my alternate which I posted yesterday and below here is a very close second place.  The decline to new lows today was a surprise, but it was extremely weak and I never thought it had any legs to sustain the decline.  The rally into the close should be the start of a Micro wave ((2)) that should take us to around the 1320 level tomorrow and maybe Monday before topping.  Like I've said before, the risk/reward favors the bears here in my view, and any gains from here I'd look at as a good opportunity to get short with a stop just above last week's high.

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This is my alternate count, although it's still in very high contention to be my preferred count.  It suggests that today's new low was a Submicro wave (B), and that Submicro wave (C) is now underway and near complete.  Most likely (C) will top out around 1315 tomorrow, and either late tomorrow or Monday should bring even heavier selling to this market.  So I'm a seller on a move above 1315, and especially above 1320.

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The euro's break above 1.3743 yesterday confirms that the decline from 1.3861 was a 3 wave move, which is a correction.  Because of that, the euro shoudl move above 1.3861 fairly soon.  From there I'll be looking to get bearish again since I still see the long term trend for the euro to be firmly down.




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 Continue Lower but Losing Momentum; Euro Should Go Higher

Internals today were fairly weak suggesting the bears still have good control of the market.  However, they are not nearly as intense as yesterday’s.  Yesterday had 2364 more decliners than advancers while today had only 897, and down volume yesterday was 1 billion shares (89.7% of total volume) while today had only 862 million shares (64.8% of total volume).  So the intensity of the decline sure waned from yesterday, suggesting today was a 5^th wave, and ending wave.  We may get a little follow through to the downside tomorrow, but I wouldn’t be surprised if we get a pop higher soon.  I definitely wouldn’t get long here, but a pop higher would be a good opportunity for the bears to get short at better levels with a stop just above last week’s high, in my opinion.

I am not in love with the wave count, believe me, but it’s the best shot at what I think is unfolding that makes sense with both the internals and momentum which has started diverging after my posted Submicro wave (3).  Looking for diverging momentum is a good clue of where to look for labeling the end of 3^rd waves.  As the above count shows, any rally from here would be a great shorting opportunity with a stop just above last week’s high.  The risk/reward is very desirable, especially considering the potential move lower that should get to at least 1275 short term, 1190 medium term, and possibly much much lower over the long term.

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I left you all a Valentine’s Day present on my February 14^th post in the form of a wedgie.  And I don’t mean for anyone to get any high school flashbacks here, I’m actually talking about the ending diagonal-like structure that comes in the form of a wedge.  It’s not textbook, but the slow choppy grind higher at the latter end of a long uptrend suggests a quick and sharp selloff to occur once the formation is complete.  Well, this wedge has appeared to have completed.  At the time I originally posted this last week I stated, “Once the uptrend breaks down, the move should be sharp and deep, at least initially.”  Well a 40 point S&P drop in two days classifies as “sharp” and “deep” I’d say.  Although not technically an ending diagonal structure according to EWP, if it’s to follow the basic tenants of the structure then we should see a quick move toward the 1275 level.

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Above is a chart documenting the trendline I’ve been following lately in order to get clues that a top may be in.  It connects Minor waves 2 and 4 (not labeled).  Today you can see that price respected the trendline as it hit it and then retreated higher.  With the evidence suggesting a move to 1275 soon, after this current little correction higher is over, I expect a strong close beneath the trendline once the bears can regain their strength, which shouldn’t take long at this point.  Doing so would put another checkmark on the board for the long term bearish count to play out, i.e. Primary wave ((3)).

Lastly, keep an eye on my longer term chart I posted last week (click here).  If last week’s highs are taken out then a push to the 78.6% Fibonacci level at 1377. 

The euro surged above 1.3743 without a problem.  Doing so has made the recent decline a clear 3 wave affair, and therefore a correction.  I now expect a move above 1.3860 soon.  After that we can then look again for a top and resumption of the downtrend. 

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 Collapse

Stocks tanked today and the internals suggest it was broad based and ugly.  The bears were in full control today and the bulls didn't even really attempt to enter this market after this morning's mild push higher failed miserably.  News headlines suggest Libya's unrest is the cause for stocks falling but as extreme and overbought this market has been the past few weeks, it could have been knocked over by Paris Hilton announcing a new BFF. 

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The count from the high is ugly if it's an impulsive decline, but imperfection this early in a trend change is not unusual.  I'm unsure where Submicro wave (5) should be placed, but at this point any meaningful rally would get me on the short side with a stop above last week's high.  Sure this could be another fakeout, we've seen plenty, but the risk/reward here is way too desirable.  Whether it's Primary wave ((3)), or just a correction in a bull market, an S&P move of 100-150 points lower is likely in my view once we can confirm a top is in fact in.  So whether it's Primary ((3)) or not, there's money to be made on the short side.  A close beneath 1275.10 would confirm that a top is in.

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My forex software is not cooperating with me today but nothing has really changed from yesterday's post.  Things looked good for the bears last night but this morning we saw most of those bearish gains taken back by the bulls.  The wave structure is unclear but with the long term trend still down, I favor the short side as long as it trades beneath 1.3743.



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 Extremely Stretched, Intently Watching for Opportunity to Strike

Only 1 billion NYSE shares were traded on Friday which is extremely light for an options expiration day.  But the market continued to float higher and there were no real signs of a top so there's nothing much to say or do for us wavers other than to wait on the sidelines for now.  Optimism as reported by EWI's services is at an extreme, momentum as shown by the RSI above is also at an extreme and diverging from price, and the wave count suggests the rally will end at any time.  But look back through the past few weeks of my posts and you'll see that these statements are nothing new.  The market has been extremely resilient and is probably trying to squeeze as many shorts out as possible (if there are any left) and suck in the last of the last of the sidelined folks to the bullish side before giving out.  This process, as usual, is taking quite long.  This is why I haven't recommended shorting into strength the past few weeks.  I feel that the downside will be great enough to where we can patiently wait for solid evidence of a top before we attempt to get short.  Anything other than that would just be "guessing".  And guessing will lose you money in the long term.

Above is a long term S&P count.  I wouldn't be surprised if this market pushed toward the 78.6% fibonacci level at 1377.55 before topping, although I wouldn't bet on the long side that it will happen.  The RSI tells us the whole picture, it shows an overbought and diverging market.  When stocks top, the reversal should be sharp, deep and fast.

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Drilling down to the 3min intraday charts you can see a nice 5 wave decline from the highs established Friday with a 3 wave corrective rally into the close.  EWP would have us conclude that the larger trend is now down and that hard selling to new lows will occur Tuesday and also maybe Wednesday at a small degree 3rd wave.  But these small timeframes are not reliable enough for me to get short right now.  If the trend in fact turned down on Friday, this decline will be part of a larger 5 wave move down to where I can get short later on with better evidence to suggest a top is in.  Without a sharp move down Tuesday, the count above would be extremely doubtful and we should look for higher levels.  But if the market does shoot lower on Tuesday, then needless to say it would certainly get my attention to track the count and structure closely.

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The euro is not looking good from neither the bullish or bearish side right now.  We have a bunch of 3 wave moves flip-flopping all over the place.  I still lean toward the bearish side because the long term trend is still down, but for the medium term 1.3743 needs to hold or it will confirm that the recent move lower was only a 3 wave drop and a new high above 1.3860 will be acheived.


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.

Market Decline Looks Corrective, Look for Higher Levels; Euro Still Correcting

I don't have time for a normal post today but with the weakness in the market today I wanted to at least post something to update the action.  The decline looks like a clear three wave drop suggesting new highs are still on the horizon.  The key levels and trendlines I've been posting are still key for the bears to take out in order for a short position to be considered.  Internals today also don't support a top and new downtrend starting off with only 927 million shares traded on the NYSE, and only a slight bearish bias for decliners and down volume.  Not a convincing case for a major top being in place, so I have to assume the market will continue higher.  I remain on the sidelines.

As for the euro, it appears to still be correcting the previous impulsive move down.  Once the correction is over, the euro should move down hard.

Posting will probably be light this week since I'm on the road.  Good luck all!


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.

Stock Volume Continues to Plummet; Euro Dips Down to a New Low Again

The market did nothing today so price action tells us nothing new.  But volume tells a lot since today was one of the lightest volume days I've seen since the holidays at only 815 million shares traded on the NYSE.  The market's uptrend is still intact, but enthusiasm and momentum for the rally has waned significantly the past week or so.  The upcoming decline should be sharp and deep.

The wave count is the same and leaves us waiting for the Minor wave 5 to top.  The subdivisions of Minor wave 5 have us finishing up Minute wave ((v)) at any time.  But with no evidence of a top in placel, we have to expect higher levels.  That doesn't mean I'm getting long, it just means there's no "execution" to the short trade in place yet and so I'm still going to wait and be patiently bearish.

The 30min S&P chart above shows a "wedgie" structure for the price action lately, and momentum and internals support this lethargic behavior as well.  Once the uptrend breaks down, the move should be sharp and deep, at least initially.  A close below 1311.74 would be a good signal that a top might be in and aggressive traders might want to consider getting short.  A break and close beneath 1275.10 on strong volume would be a very strong sign that a top was in.

I'm not sure that the upcoming top is that of Primary wave ((2)), but even if it's not, a correction to around the 1180 level (prior 4th wave) is still very likely.  Either way, waiting to get short seems to be the best play here in my opinion........as painfully boring as it may be.

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The euro continued falling to fresh lows last night and the bearish count and outlook remain on track.  I'm unsure as to the very short term wave count so I'm not including it.  But right now I see no reason to abandon the bearish stance.

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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.