Wednesday, October 15, 2014

Elliott Wave Stock Market Update - October 15

The market really sold off today and has made its intention clear. A few days ago I posted the possibility of an expanded flat pattern or a bearish W3 in the works, but given the market's oversold condition and the fact that the 200 DMA had not been tested, much less broken in 2 years, made me lean towards the expanded flat option. But now that it is clear it was a W3, I can look for other possible bottom targets. As of now, if the market puts in a final 5th wave that equals W1, then we're looking at 1818. There is a very important support level at 1814 that must hold, but if the W3 extends then the next key support at 1738. I was stopped out early morning at a loss and I will just sit it out until I see something worth trading. For the record, I still think the sell off is not a sign of anything serious but part of a consolidation period (LT INT W4). The question is, will the bigger correction be a triangle, zig zag or a flat?

News of Ebola and the "economic slowdown" is the excuse for the correction, but chances are Ebola will be contained (despite inept handling so far) and the world will likely be just fine. Lower oil prices just translates into an economic stimulus everywhere in the world.  And should any country see any real possibility of a slowdown, we will just get more QE or stimulus packages. Something the great majority of people fail to realize is that the number 1 beneficiary of corporate profits is not the shareholder, the CEO, or the company. It is the government. Which double dips with corporate taxes and then dividend taxes and capital gains. In addition to income taxes, payroll taxes, property taxes, sales taxes, etc taxes. So the second there is even a suspicion of anything that might affect profits, you will have smart people in charge of economic policy make sure those profits keep coming in. A good economy for a government is not a luxury, it's a matter of self preservation.

We will be making trade recommendations this weekend on the EWA site. For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit

Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bullish trend being challenged

* 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.

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