Monday, June 2, 2014

Long Term Market View

The market reached the 1925 target today after pulling back to the 1915 level. Technically, I could label 1915 a W4 and the wave to the high today a W5, but I have my doubts about the entire structure being finished already. I think it would look better if we have a better looking W4 and then a W5 that is proportionate to W1, which was 18 points. But whatever it is, a substantial pullback should be coming sooner rather than later. And to illustrate where we are in the long term charts, I posted the SP500 on a monthly time frame. Note where the RSI is and what has happened every time the monthly RSI has gone into an extreme. So while the market could go up some more, the risk/reward does not favor being long in the long term. If a person pulled out of the market at the first turn of the trend during the RSI overbought extremes and bought at the oversold extremes in the last 12 years, he would have 600% return without even going short. I would call this the most simple way to make money long term in the markets, not much thinking needed using this particular system.

Another interesting fact this month is that this is the 64th month of the bull market. This monthly number has coincided several times with significant peaks in the past, most notably the Dow in the 1920s, Nikkei in the late 80's, Nasdaq 2000 and couple of others than fell in the 60th and 65th. Obviously, this is just numerology and it could all just be coincidence. But there's no denying the monthly chart I posted favors a big pullback in the next few weeks.

I continue to hold the VXX from last week but did not add to short position despite 1925 being hit. I think I rather see a trend change first before adding to shorts. As of now, all trends are bullish and the best is obviously not to short blindly.

For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit

Short Term Trend = Bullish
Medium Term Trend = Bullish
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Elliott Wave Analytics

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