Possible Short Term Wave Counts, S&P/Euro

I'm posting the internals after the close today. My intraday post from this morning is below. Internals were extremely bullish however volume continues to pull back, now down below 2 billion NYSE shares today.  Not encouraging for the bulls.  With the new highs made today above my wave ((a)), it's possible wave ((c)) of Minor wave 4 is already over. And the late day selloff into the close may be a hint of Minor wave 5 already beginning. We'll see tomorrow.  If wave 5 is already underway then it should be almost a straight line down tomorrow.  If wave 4 up is still working itself out, then we'll either get a sideways or up move tomorrow.  Either way, my finger is on the "sell" button at every opportunity.

Also, at the bottom of this post, check out the new Prechter video of when he was on CNBC's Closing Bell the other day:

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Please read yesterday's post below for bigger picture bottom line analysis.  Basically I think a Minor wave 4 correction is underway that may take the form of a triangle (sideways move).  Another possibility may be a simple zig-zag correction (ABC) as shown above.  Tuesday's big triple digit Dow rally looks impulsive, which could make it an ((a)) wave, then you have a clear 3 wave decline with yesterday's selloff for wave ((b)), then this morning we have a clear impulsive rally again which is probably just a wave (i) within wave ((c)).  If correct, the market should rip higher in wave (iii) of ((c)) fairly soon. 

This is very very speculative on my part and just food for thought of something to watch out for the rest of the day and tomorrow.  I'm not getting long at all, I'm merely tracking this count to determine when to get short on a rally.  At any time this market can easily break down to new lows since it's now in a clear and strong large downtrend.  A sharp rip higher would put the above count on track.

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This count only works on a closing basis so confidence in it low in that respect.  Ignore the degree of trend since I'm unsure of it right now.  I'm just sticking with EWP basics of 1-2-3-4-5 / a-b-c right now.  On a closing basis it's such a perfect EWP pattern, I just can't ignore it.  If correct, the euro should be headed sharply lower very soon.  The above chart and count warrants at least a short term short position in my opinion since the risk/reward is so great with risk held at a new high on the day (stop 1.4293), or the start of the impulsive decline (stop 1.4400).

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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.

The Sideways Minor Wave 4 Takes Hold; Euro Set to Breakout Soon

Internals calming down a bit today relative to the last few major triple digit moves we've seen the past couple weeks.  Volume was still very high overall though at 2.14 billion shares.  Of that volume, 93.5% was to the downside.  Overall, again a very bearish day.  My guess is that margin calls are hitting traders and fund managers' desks forcing the large selling of their assets, which in turn facilitates further margin calls and more forced selling.  Then speculators are jumping on board and riding the short term trends, magnifying the impact of these moves.  So we get these wild swings on huge volume.  As far as price structure and internals go, this market looks ugly and in severe trouble.  Somebody  better do something "magical" to calm the markets down at least short term or this thing will continue to fall off a cliff in the coming days.  Things are bad.

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I'm still thinking that Minor wave 4 is underway which should lead to a see-sawing up and down with very little overall net gain or loss over the next week or so.  This is highly speculative on my part since the market can easily just plummet lower at any time and I'm trying to give wave labels to basically a straight line down.  Yesterday we had about a 450 Dow rally and today we had about a 530 Dow decline, but no new low.  So wave 4's choppy sideways move is off in typical fashion.  I would not get long this market at all, I'd simply be looking for rallies to short into.  This market remains bearish overall.

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The financial sector has finally broken down.  I have said this a couple times in the past couple years as the $14 level was taken out, but was wrong on both accounts obviously.  I feel more confident in calling it a breakdown now that it's in the lower $12 range now.  Financials are the backbone of our economy.  We have to borrow money to buy or do almost anything in this country, i.e. buy a car, house, go on vacation.  So if financials are breaking down this severely as seen from the above weekly chart, it shows you how much trouble our economy and stocks are in right now.

Nothing new here for the euro as the bears and bulls keep exchanging blows in a truly consolidative pattern.  The bears have a slight edge here in my view though since there is a series of lower lows and lower highs in place, suggesting the making of a larger downtrend is at hand.  But with no clear EWP count on the bearish side, it keeps me honest and cautious of getting too aggressively short.  The euro is due to breakout from its consolidation at any moment, and the weight of evidence slightly favors the breakout being to the downside.

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 Rebounds, Minor Wave 4 Underway; Euro Continues to Consolidate Before Breakout

The market was deeply oversold going into today's session, and the bulls pounced on that opportunity.  With little bears left to sell the market the "buy the dip" crowd came in today and surged the market higher.  As a bear I would have liked to have seen lighter volume on today's move, but with 2.4 billion NYSE shares with 97% to the upside, the bulls are making a strong move here to put in a bottom.  I'm not convinced a bottom is in place, but today's rally certainly got my attention.  But let's look at volume in a little more detail through the S&P's ETF (SPY):

Looking at volume on the day as a whole on the NYSE, it was a very big volume day.  And looking at the big rally into the close you'd think it was all bulls all the way.  Although for the most part this is true, when you look at down volume relative to up volume on the SPY, you'll see there was still a slight bias to the downside with volume decreasing on rallies and increasing on declines.  This is a very small piece of evidence showing a slight bearish undercurrent on an otherwise very bullish day.  Just something to keep in mind when looking at the rally as a whole today.

Should Stock Investors "Fret Over Economy"? No -- See Chart to Understand Why

I know a lot of folks have been very excited and happy this decline has taken place over the past several weeks.  In fact, I know a couple of people who are absolutely joyful that the market has fallen so much so fast.  And no, they are not bears and they are not short.  They are perma-bulls who view this decline as a great buying opportunity.  Well people like this, and many wise short term traders who covered their short positions, were the reason why we had this bounce today.  The only difference between the two groups of people is that that the perma-bulls will hang onto their long positions and get their faces ripped off on the next series of declines while the wise short term opportunist traders will know when to get short again.

Today's rally may be part of a Minor wave 4 which I speculatively drew out a path forward in the above chart.  I expect further rallying tomorrow morning, but if it's a 4th wave, the overall move over the next week or so should be that of a fairly sideways move.  The key for the bears is to keep the Minor wave 1 low intact at 1258.07.  As long as the S&P cash index remains below that level, I'd be selling into rallies.

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The euro continues to consolidate and will breakout hard and fast soon.  If I weren't a waver I'd look for that breakout to the downside.  But being a waver makes feel that this consolidation is similar to a triangle which means the consolidation is just a correction of the previous trend (up) and once the consolidation is over the previous trend will continue (up).  So I'm conflicted.  But I think the weight of evidence and risk/reward tell me to stick with the basics which show a series of lower lows and lower highs, so I think the short side should be favored as long as a new swing high on the daily chart is not made.


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.

Markets in Chaos (again); Euro a Mess

The stock market action has been jaw dropping to watch the past two weeks to say the least.  The Dow lost almost 1800 points in just two weeks.  Wall Street overvalued the market going into the so-called "recovery", and now there is a severe repricing of that recovery.  It's happening in a hurry though and panic is well set in.  That doesn't mean a bottom is in though, the market closed down huge and on its lows today, and both the international and US governments have so far failed to calm the nerves of investors over the crumbling backdrop of our financial system. 

But just like the market overshot to the upside recently, it will also overshoot to the downside and lead to a sharp relief rally.  When that happens though, I have no idea.  The selling pressure is beyond intense and should be very worrisome for investors and politicians.  Today's volume on the NYSE was a whopping 2.54 billion with practically all of that volume going to the downside.  It's really jaw-dropping.  Just crazy.

Should Stock Investors "Fret Over Economy"? No -- See Chart to Understand Why

I'm going to address the giant elephant in the room, Bob Prechter.  There's no more avoiding it, or sugar coating it, Prechter's Primary wave ((3)) analysis is fitting in well here.  Primary wave ((2)) would have stopped shy of an all time high, and the strength and speed of the current decline is certainly that of a very large wave 3.  Prechter's call is back in business, and as prudent investors and traders, we should all at least be mindful of the current downside potential if Prechter is right.  Today's selloff feels like a "point of recognition" at some degree, meaning that we should be approximately in the middle of this current Intertermediate wave (1) of Primary wave ((3) down.  If correct, the market should continue sharply lower for most of this week taking the Dow at least another 1000 points lower before any meaningful bounce occurs.

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The euro is a mess.  It looks like a correction, but the lower highs and lower lows keeps the downtrend intact and open the door to a sharp selloff at any moment.  But with this structure in price being so choppy, it's hard to gain confidence in the bearish outlook.


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.