Into the Weekend

Options expiration gave us some volatility in the morning but it has since faded.  I don't expect much action the rest of this Friday but so far only the Dow has made a new high.  As I said yesterday, a new high in the Dow would gives us a "restart" on trying to get an impulsive decline which it had yet to achieve while the Nasdaqs and S&P appeared to already be in impulsive declines.  We got that today and the S&P and Nasdaqs haven't followed.  So this divergence remains in place, and a turn down from near current levels could be extremely bearish.  But we'll probably have to wait until next week to see if that happens.

As for the euro, it has rallied again and it appears it may be entering a blow-off type top.  It's still overbought and a bit choppy, so I'm not bullish the euro, and the US dollar is looking strong against other currencies so I'm still not convinced the euro will soar much higher.  But until we get some bearish action in the euro. a charge toward 1.4300 cannot be ruled out since the decline from that level could be counted as a 3 wave move.  The AUD/USD however is still weak and sports a clear and full EWP structure and doesn't appear to be flipping bullish anytime soon.  So it's a mixed picture here and we need to wait to find out which one of these gives way and follows the other unison like they usually do.  So I'm still cautiously bullish the US dollar, bearish the Australian dollar, but the euro worries me a little.  Have a good weekend!

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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 Look Bearish but Dow Might Eek a New High; US Dollar Looks Strong

Internals today don't tell us much but that some extra volume hit the market today, probably explaining the volatility on the day.  Down vs up volume was slightly bearish but there were quite a few more decliners than advancers (721) on the NYSE.  Although the bears couldn't follow-through with more selling pressure this afternoon, the bulls were unable to get the main indices in the green despite the late day push.  The internals and price action still suggest a bearish market right now.

Again the higher risk tech stocks, as illustrated here through the Nasdaq 100, is outpacing the high caliber blue chip stocks in the Dow to the downside this week.  To me, this illustrates some fear in the market since folks are ditching their higher risk assets and moving into lower risk assets in the Dow.  The S&P, and pretty much all indices, are outpacing the Dow to the downside at the moment, suggesting at least a short term flight from risk.  That's bearish for the market moving forward through the next few days at least.

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The one slightly bullish piece of evidence I see is the choppy decline in the Dow.  The Nasdaqs and S&P appear to be declining impulsively, although it's too early to get married to a count on them yet so I won't bother posting them yet.  But to see my longer term wave count I posted a few days ago, click here.  But the Dow's price action is clearly corrective.  That suggests that at least the Dow will make a new high before the overall market continues selling off.  This is not a requirement, in fact today's push higher in the Dow that failed to make a new high may be a truncated 5th wave.  However those are extremely rare, so don't count on it, just be mindful of it.  The best case scenario for the bears would be to see the Dow eek out a new high tomorrow without the S&P and Nasdaqs following along, then the market reverses to the downside with that divergence in place.  But regardless, without over-projecting the technical movements of future price action, the market looks bearish right now and any rally in the S&P that's capped at Tuesday's high would be a good shorting opportunity in my view.

The AUD/USD held up to yesterday's expections in that it topped out at the 61% fibonacci level and then sold off hard.  I'm unsure of the larger wave count so please don't hold me to the wave degrees at this moment.  The euro, on the other hand, also held up to yesterday's expectations by doing its own thing and not tracing out any clear patterns in the short term at all.  So if we go to basic technical analysis we see the euro having trouble getting through previous resistance at the 1.3460 area.  And the latest short push to a new high has not been confirmed by the stochastics and RSI.  When you add this together with the structure of the AUD/USD, it still has a bearish picture for the euro.

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Risk is Peeling Back, Stocks May Have Topped; US Dollar Mixed

Internals today were very bearish as you can see.  Down volume dwarfed up volume, and decliners on the NYSE far exceeded advancers.  The bears roared today, but they did so in small numbers with just above 1 billion NYSE shares traded, it wasn't a jaw dropping day.  But it may just mean it wasn't a compitulation-type selloff that often is just a one day event and reversed immediately after.  I think today was a sign of more selling pressure ahead.  We need more market action to unfold for me to be more confident in stating that a top is in, but I know I'd try to start getting short with a tight stop ASAP.  The risk/reward here in combination with the bearish evidence is too good to completely pass up in my opinion.

The above charts illustrate what I mentioned yesterday in that we may be seeing an exit from risky assets and an entrance into more conservative assets.  This may be way the Nasdaq 100 has dipped out of the rally early and sharply while the Dow has held up quite well so far this week.  The S&P also took a big hit today, probably because there are still a lot of fairly high risk and speculative stock in the index, unlike the Dow.  So two days in a row we've had this behavior.  Will it continue?  The longer it does, the more likely a significant top is in place, and not just a minor two day lasting top.  Also note the 5 wave decline I mentioned in the Nasdaq 100 this morning here.

The bottom line is the market's recent rally is overextended in price, sentiment and momentum, and the 5 wave rally on the daily charts and now the small 5 wave decline on the intraday charts suggest at least a fairly large pullback is in the cards now; if not a total market collapse for Primary wave ((3)).  I would at least be nibbling on the bearish side right now.  The risk/reward is too good to pass up in my view.

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The US dollar picture is mixed when looking at the euro and Australian dollars.  The euro is not sporting a clear impulsive decline and I see a big 3 wave drop on the daily chart staring right at me.  That suggests we need a new high at least above the 1.4200 level before thinking a major top is in place.  The euro broke above my key level of 1.3465 but did not sustain it, and the price action and momentum look weak.  In addition to that, the Australian dollar vs. the US dollar is sporting a textbook EWP structure with a 5 wave decline and a 3 wave rally stauling at the 61% fibonacci level.

My bias is to the short side here for the euro and Australian dollar, and therefore I'm bullish the US dollar.  But I'd still be cautious and make sure risk is managed tight here.

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Brief Morning Update; Bears Can Start Nibbling

With the Nasdaqs being the higher risk of the major indices it's always important to watch what they're doing as part of the analysis process of the overall market.  Yesterday and today the Nasdaqs have been weak, and the internals are the same.  The strongest index which holds the bluist of the blue chip stocks is the Dow and it's fairing the best this week, suggesting people are moving out of risk and into "safety".  This behavior often acts as a precursor to a selloff phase.  Also, notice the amount of down volume relative to up volume on the NYSE as well.  Some fear and profit taking is coming into play here, another bearish sign for the upcoming days/weeks.  And when you take into account the high level of optimism, the overstretched rally, overbought momentum indicators, and the VIX sell signal that executed yesterday, it makes for a good setup for the bears on the short side here.

Another good piece of evidence for the bears is the 5 wave decline in the Nasdaq 100.  The evidence is strong that a top may be in place and it's worth it for the bears to at least start nibbling here, in my opinion.

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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 Float Higher; Euro Big Picture Foggy, but Good Short Term Setup in Place

The Dow can take the credit for the market looking so bullish today since it was the only major index showing strength.  But peeling back the onion shows a more flatter market.  Volume on the NYSE was moderate at 1.22 billion shares but what’s really interesting is the volume ratio on the NYSE.  Notice that there was a bit more down volume to up volume today, despite the positive closes and seemingly bullish day.  Could people be dumping their riskier stocks and moving their money into more conservative stocks that compose the Dow?  One day doesn’t tell us much, but it’s something to watch closely for continuation of this behavior later in the week.  If it continues, it would probably mean and shift to being more conservative which usually results in a selloff eventually.

The wave count remains the same, click here, so no sense in me relabeling the same stuff everyday when not much has changed in price, and nothing has changed in the count.  We remain in a 5th wave, probably at multiple degrees, and when complete we should see at least a 100 point S&P selloff over the following weeks.  But unfortunately for the bears, the market shows no signs of reversing, only exhaustion.  But without any reversal signs, most of us know the market can continue higher with extreme readings for a long time.  So look for higher levels until the market shows that it’s had enough and needs to pullback.  It should be unmistakable.

Looking at a different chart we can see that the RSI on the daily chart has reached overbought again.  This doesn’t mean a top will occur right now, but it is just another indicator telling us this market is overbought.  The risk is to the downside, and I’d rather be looking to short than holding long at this point.

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Although the VIX sell signal failed us miserably last time, we find ourselves with an extremely overbought market and the VIX sell signal in place again.  This occurs when the VIX closes below the lower Bollinger band one day and then closes back above that lower Bollinger band.  Usually a top in stocks occurs within 10 days of the signal executing, but in this market I’d say it should be shorter than that.

The euro is flip flopping all over the place with 3 wave moves all over the place.  I’m not certain that the larger downtrend is still intact so I’m cautious here for the longer term bearish view at the moment.  And when the wave count is unclear, it’s usually because I’m looking for an impulsive move but it’s usually in a correction and therefore causing confusion.  But I still see a possibility that the larger trend is down based on other indicators so I’m still going to be cautiously bearish the euro for now.  Looking at the action the past few days I think the bears have a good opportunity here. 

There appears to be a lot of resistance at the 1.3400 level as you can see from the long wicks on the candlesticks there.  And we got two real long ones just recently.  What I love about this price action is the break above 1.3400 which was sharply repelled and reversed, then later another break above 1.3400 is attempted and even more sharply repelled and reversed, and the move wasn’t confirmed by the RSI either.  So this sets up as a nice shorting opportunity with a stop just above today’s 1.3465 high.  The risk/reward here is outstanding so I really like this trade.  A solid and sustained break above 1.3465 (more than 2 hours in core trading) would probably open a door a longer and more sustained rally over the coming days/weeks.

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Still Waiting for at Least one More Pop in Stocks; Euro Rally Impressive but Overdone

I'm not impressed with today's decline at all.  It was a choppy grind lower on very light volume.  Granted, there was no follow-through higher from yesterday's big rally which the bears might call a victory, but today's pullback just feels like a pause before that uptrend continues.  Internals and price action suggest another move higher tomorrow and/or Monday.

Nothing new to add to the wave count.  A series of 5th waves are playing out and once finished, we'll have another shot at a major top being established.  But patience is key here.  Extremely aggressive short term traders could continue to play the long side when opportunities arise.  But outside of that, the risk is to the downside for everyone else in my view.  Patience is the trade right now for the rest of us.

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The euro rally today was very impressive, and unexpected.  It puts the current wave count I have here in jeopardy.  The lack of a clear wave count on the downside move the past few weeks is concerning.  Usually when that happens it's because I'm expecting it to be an impulsive move, but the lack of clarity means it's probably a correction.  I have that concern here, and today's continuation higher elevates that concern.  The euro has probably ran too far too fast and the RSI is overbought on almost every intraday chart, so a pullback might be in the cards soon.  The strength and structure of that pullback should tell us more about the euro's future prospects.  I'm not getting long here, I still would like to be short, but I'm extremely cautious and managing risk tight on this one right now.  1.3433 is key for the bears but it seems that it's going to be taken out soon.  Doing so won't eliminate the bearish potential, especially if it's reversed in quick order because it may mean it's a wave C of a flat correction.  If 1.3433 remains intact, and a sharp impulsive decline occurs, it will mean the bears are back in control and shorting should be favored.

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Stocks Rally Strong Today, Still a Little Left Before a Top; Euro Correction May be Completing

Quite a nice surge for stocks today, and the internals suggest it was a solid move as the bulls had firm control today on the advance/decline ratio and volume ratio.  However total volume again remains light as today came in just under 1 billion shares.  So there are few folks jumping on the 2011 rally train at this point, despite the overwhelming optimism for a great year for stocks, yet those small amount of traders in the market seem to pretty much be mostly bulls right now.  So the market pushes higher.  Today's strong move suggests at least a little more upside before we can start looking for a possible top.  But those of you who have been around long enough know that when the market looks overextended to the upside, it can continue moving higher with that overextension for long periods of time.  So patience is key here.

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Today's push higher fits well as a 3rd wave of some small degree.  If correct, it means we still have a small 4th and 5th to complete before a top.  So tomorrow, and probably the rest of the week, may still be in the control of the bulls.  I think the 1300 level is going to act as a magnet for stocks as a psychological level to hit before giving way to sharp selling pressure.  So it wouldn't surprise me if we meander into, or around, that level the rest of the week or so.  But with the wave count this far developed, and the RSI diverging like it should in 5th waves, I would still not want to get caught long here.  Sure, the market can extend higher and higher, but trading isn't about being right 100% of the time, it's about managing risk and entering high probability trades when good opportunities arise.  And I don't see good opportunitites on the bullish side here.......too much risk right now and too late in the trade.  So I'm still waiting to get short.

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I'm unsure of the euro's larger wave count at this point so use my degrees of trend labels lightly.  I only placed the labels there to illustrate the impulsive decline we recently had that made a strong new low beneath the formidible 1.2970 area.  By breaking that strong support level, and doing so in an impulsive manner, it's not a surprise that we are getting a corrective rally here.  The slow, choppy, sideways start to this rally suggests it's correction, and the sharp move last night and today suggests it's probably a C wave within a larger correction.  Right now it's trading around the 50% fibonacci retracement level of the entire impulsive decline, so it should offer some resistance and even mark a possible turning point for the euro.  So bears should be ready to pounce if they haven't already nibbled on the short side already.

The bottom line is that with the impulsive decline to break through solid support levels it appears the euro's larger trend is firmly down.  I'd be shorting here and on further rallies and stop out some or all of my position on a break above 1.3433.

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Stocks Stay Afloat, but Volumes are Light; Euro Correcting

Market participants remain uninterested in stocks this year as volume on the NYSE again held under 1 billion shares today.  I'm one of those "uninterested" folks since the market is quite boring and uneventful lately.  Great for long term investors, but horrible for swing traders.

The S&P, and especially the Nasdaqs, keep pushing higher.  The S&P appears to have just traced out an overlapping wave structure to the downside earlier as part of a correction (maybe a 4th wave).  Now the market is moving higher for a third test of the highs.  As I've said many times before, triple tops are extremely rare, so don't plan on them.  This means higher levels in the near future.  But how long those highs remain in place is anybody's guess.  I'm a bear lying in wait for his chance to strike.

The Dow appears to be lagging the S&P and especially the Nasdaqs.  It MAY be part of a fracturing of various indices, or it could just mean that it's "risk on" right now and people are dumping boring blue chips and going with higher risk names.  The latter scenario is good for the bulls, the former scenario is good for the bears. 

The bottom line is that I think the market is overextended right now and there's too much risk to the downside to get long here.  But with no solid evidence of a top in place yet, I can't get short either.  So I wait.

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On the other hand the XLF (financials ETF) sports a nice 5 wave decline and 3 wave rally topped off with a nice sharp reversal candle in wave ((C)).  If this count is correct, expect financials to fall hard real soon.  The overall stock market should soon follow.

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The euro fell just shy of giving a perfect 5 wave decline, but the Australian dollar did give us that 5 wave decline against the USD.  This suggests that the larger trend is down, and although the euro decline is not a perfect 5 wave move, it still looks impulsive.  And with the current upward-to-sideways choppy action looking corrective, I'd be looking to short, or add to short positions, on rallies here.  The euro bears and US dollar bulls appear to be in firm control here.

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Market Whacky....but Might Just Be a Small 4th Wave; Euro Unchanged

I wish I had something interesting to write about today but I don't.  The market continues to wander around, giving no real definitive signs of reversal, or continuation for that matter.  Today's volume was light at just under 1 billion on the NYSE, and other internals were basically flat, along with market price.  So today tells us nothing really about the bigger picture.  A top MIGHT be in right now with a series of lower highs, but the internals don't suggest any capitulation or massive selling volume or pressure from the bears coming in to reverse the trend.  So let's look at the wave count.

I've mentioned a few times that we might just be in a small 4th wave and so today I labeled it Minuette wave (iv) above.  You can see that this would leave us with one more surge to a new high before forming a major top.  Now this is not required, and the series of lower highs on several indices and markets may be the first sign of a very quiet reversal.  But I would have a tight stop, preferably at the previous swing high, if I were to short here.  The light volume and meandering nature of this market fits more with a 4th wave, not a reversal in trend.  I would imagine a top at the degree wavers are projecting (Primary wave 2) would be a much more violent affair, and one accompanied by solid volume as well.  So we continue to wait.

As for the euro, it was practically unchanged.  It's possible a short term bounce capped well below 1.3400 will occur in the coming days which would align itself well with a stock market pop for Minuette wave (v) as well.  But neither bounces are required, and although it seems like the higher probability at this point, it wouldn't surprise me if at any time both the euro and stocks just fell off a cliff.  But until I get some kind of confirmation or certainty of a trend reversal, trading now would just be a guess.  And I don't trade on guesses.

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Stocks Weak, but Waiting for Confirmation of a Top

Stocks are finally showing signs of weakness this morning after being invincible the past few weeks.  Perhaps the New Year euphoria is slipping away a bit.  It's too early to tell if a top is in at the moment, but the series of lower highs on the 15min charts is the first step in confirming a top.  For aggressive traders I can see shorting now and placing a stop above the recent swing high and then trailing that stop down as new swing highs are established.  If a top is in, that short term aggressive trade may turn into a big longer term trade.  For less aggressive trading I'd sit and wait to see if this decline can develop into a 5 wave impulsive move down before getting short.  This may still just be part of a small 4th wave, so patience is important here.  Without a 5 wave decline, we still have to leave open the possibility that higher levels will be achieved soon.

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As for the euro, it's not falling along with stocks and appears to be a bit exhausted to the downside; at least for the short term.  With an impulsive decline to a new low on the table right now, it would not be a surprise to see a recovery rally here.  I don't expect any rally to come even close to 1.3400, but if it does, it will open the door to much higher levels from there.

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 Showing Weakness, but Probably Just a Small 4th Wave; Euro Continues Falling

Internals today were fairly bearish yet volume was still quite light at only 1.09 billion shares traded on the NYSE.  Down volume had quite an edge today vs. up volume on the NYSE, and decliners well outpaced advancers on both the NYSE and the S&P.  Yet the price decline was relatively tame, and the market just floated sideways most of the day before a mild rally into the close.  So to me, the market movement from yesterday and today smells like just a small 4th wave, and one more new high should occur before a sharp and noticable reversal. 

The RSI divergence is still in place on the daily S&P chart, and today's down close resulted in the RSI turning down from overbought territory as well.  A new intraday high and reversal tomorrow would be a nice development for the bears.  It would result in yet another unconfirmed high in price, while momentum (RSI) fails to confirm it and probably continues to drop down, and further develop the larger divergence established at the November high.  The big employment number comes out tomorrow, so perhaps we'll get that pop and reversal to the downside.  If I see a big sharp rally tomorrow morning, I will probably fade it (short into it) for a short term trade.  A big reversal should occur any day now, but I'm still waiting for a good opportunity to enter.  I don't like enter a speculative trade at a reversal point right before going into the weekend, but a sharp morning rally will beg that I at least attempt a short term short position with well controlled risk.

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The euro continues its decline and the US dollar continues its rally.  Today's decline to new lows made the entire decline this week look like a nice impulsive move, suggesting that the larger downtrend has resumed.  With 5 waves down possibly complete, a corrective rally may occur soon that remains well shy of getting above 1.3433.  With a nice 5 wave decline on our hands, I'm firmly bearish as long as it trades below 1.3433.  And a break below 1.2968 will open the door to an almost certain test of 1.2600 soon after.

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 Still in Rally Mode; Euro Fell as Expected

So Scottrade modernized their data and charts so we have to adjust and get used to this new style here for the internals.  Volume was fairly light today on the NYSE with just over 1 billion shares traded, but what’s really of note here is the large amount of up volume compared to down volume along with the solid amount of advancers to decliners.  The Nasdaqs and small cap indices made some real nice gains today after slacking a bit yesterday, suggesting this market isn’t quite done running higher for the moment.  I expect more floating to the upside in the short term.

Nothing’s really changed from yesterday in the wave count or momentum picture.  As of right now, the RSI is diverging from the newest highs in price on the S&P.  This is typical 5^th wave behavior, so the count I have labeled remains likely, at least at the Minute degree.  I see no signs of a reversal or top here, in fact it appears we still need some sideways or mild declining before we get at least one more last small surge to new highs to complete the smaller degree wave pattern.  So a float higher in the short term still seems to be the likely scenario from here.

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The XLF has been making strong gains the past few weeks, along with stocks.  But it still remains shy of its April 2010 high while the stock market has well exceed that high.  So a slight divergence is in play here.  A turn lower in the stock market real soon would confirm this divergence and suggest a larger decline was underway, perhaps the 100 point S&P decline I mentioned yesterday.

So for stocks, I’m still waiting.  I don’t see a desirable risk/reward ratio on the bullish side right now, yet I see no signs of a top and reversal for the bears either.  So I have to just sit and wait patiently for an opportunity to present itself.  And I’m looking mainly for shorting opportunities at the moment.

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The euro declined nicely as I thought it would after seeing that daily reversal candle yesterday.  The wave count from the Primary wave C high is still unclear but there is no reason to abandon the bearish view right now in my opinion.  Rallies have a tough time sustaining themselves, and the euro is trading very heavy overall.  I remain cautiously bearish the euro and bullish the US dollar.  A break below 1.2968 EUR/USD will open the door for a test of 1.2600 soon after.  

December 30, 2010
Prechter on CNBC - "Not a bear among them"

Robert Prechter of Elliott Wave International and Don Luskin of Trend Macro share their opposing market views with CNBC host Larry Kudlow. (Note: Prechter's interview starts about four minutes into the interview).

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2011 Begins, and the Bulls are as Bold as Ever

I hope everyone had a good holiday season and is ready to make 2011 the best trading year for wavers since 2008.  I’m finally back up and running with full internet access so postings should be back on regular schedule now.

The markets did pretty much what I suspected they would do during the holiday lull in that they just floated higher on light volume.  The first day of the year resulted in an exuberant rally as it seems investors feel the market’s outlook for 2011 couldn’t be peachier.  I had a conversation with some folks last week who are not too financial market savvy and they told me I better buy stocks now because 2011 is shaping up to be a great year for stocks and the economy.  I told them I’d think about it.  But the only thing I was thinking about was how fast I could get back to the internet to place a short trade after hearing that.  I didn’t short anything, but the point is that I feel the optimism seeping threw every aspect of my life all the way to some of my friends who barely know anything about the financial markets, yet feel so bold in their outlook that they offer financial advice to anyone who will listen.  This optimism is ripe to be picked and squashed by the bears.

Internals today were slightly bearish on moderate volume, nothing stands out at me here.

I’m expecting around a 100 point S&P decline to come quite early in the new year.  This will take us to the bottom of Minute wave ((iv)), a typical retracement level for corrections.  But if Primary wave ((2)) is complete, then it will be more than a retracement, and the market will soar right through that level without any problem.  The wave count and momentum divergence supports this view. 

There is a quite clear 5 wave rally off the Minor wave B low at the 1000 level in the S&P.  Whether this is part of a larger uptrend, or the end of one, is irrelevant in the short term in my opinion.  The bottom line is that either way, a pullback is coming.  Although I wouldn’t be pounding the short side just yet since I see no solid evidence of a top and reversal, I also would not be in a position to get caught long in an illiquid, or unprotected, position either.  Plus, it seems very possible that we may push higher for a week or so to the 1300 level as all the “Average Joe’s” buy into the media hype about how great 2011 will be, which should be the perfect time to pull the rug out from under them and drop this market off a cliff.  So I think patience is warranted here for the short term players. 

Once I see something definitive, like a solid 5 wave drop on heavy volume to new swing lows on the intraday charts, then I’ll post it here.  Until then, I’m sitting this out.

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The euro’s short term wave structure has not been clear lately.  Oftentimes when this happens it means the messy movement is just part of a correction.  So I’m cautiously bearish here.  So far, we only have 3 waves down from Minor wave C high around 1.4250, which doesn’t allow us to confirm the larger downtrend has resumed.  However, the euro has had a lot of trouble mounting any type of rally the past few weeks, and today marks a nice bearish reversal pattern.  So staying short still seems wise to me.  As long as today’s high remains intact, I think aggressive bears have the best play here. 

December 30, 2010
Prechter on CNBC - "Not a bear among them"

Robert Prechter of Elliott Wave International and Don Luskin of Trend Macro share their opposing market views with CNBC host Larry Kudlow. (Note: Prechter's interview starts about four minutes into the interview).

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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.

Be Back Posting by Tuesday, January 4, 2011 HAPPY NEW YEAR ALL!!!!

The Wait Continues

Internals today were a bit unusual.  The advancers vs. decliners in the NYSE and S&P were both very bullish, yet volume and up volume was quite timid compared to the advancers:decliner ratio.  If a little more volume came into this market it probably would've resulted in a much greater advance for the day.  But volume didn't come in, and the market flattened out after the initial morning surge, leaving us with a fairly solid close higher today.  Again, the bulls are having trouble pushing the market higher and sustaining it, the internals support that.  But on the flipside, the bears aren't doing much either, so the market is still able to float higher for now.  This is typical behavior for this time of year though, so without signs of a reversal, we should expect higher levels and wait to get short in my opinion.

The wave count has us waiting for Minute wave ((v)) to end.  With the holiday season and typical light and bullish trading until after the New Year upon us, I could easily see this market holding up until early January.  It's certainly not my prefered outlook, but definitely possible considering the typically bullish time of year we're in now.  I would steer clear of short term long positions here and either establish shorts now with well defined risk, or wait until a good shorting opportunity arises that allows for managing risk properly.  The bottom line is that for the short term, I think the next good opportunity will be to the downside.

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The euro challenged the congestion area surrounding 1.3200 I mentioned yesterday which I said could act as temporary support.  It did just that today, and now is pushing higher up off that support floor.  In light trading it might be hard to bust through that support level, and it's possible to count 5 waves down on the intraday charts suggesting a bounce is do, but eventually I do feel that it's likely the 1.3200 level will be taken out handily in the near future.  Doing so would instill more confidence in the aggressively bearish count above.

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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.