Tuesday, October 21, 2014

Elliott Wave Stock Market Update - October 21

The market has comfortably reached the first Inverse Head and Shoulder's target of 1924 and it looks like it is going for the second target of 1978. And now that 1926 was taken out and the market trades substantially above the 200 DMA and the Trend Average, we can now see that 1821 was an important bottom. And despite the 100+ points rally from the bottom, the daily MACD has not ever made a bullish cross so this could easily be the start of a bullish wave that will go to substantially higher highs. With that said, this bounce to this level could still be a B at the intermediate level and then see a C wave that will test the 1821 low. But as it is, there is an ABC pattern to 1821 from the top.

Now that the environment has turned bullish, I am starting to see new reasons on the media of why the market is rallying. But the real reason imo that nobody talks about is the market had been correcting for almost a month already and bears had been running out of time to make their case. And as I've stated many times in the past few years and during each one of the corrections, as long as the economy is growing, there will be profits and that will keep the market going up. It's interesting to see how people are gripped by what I think is irrational fear every single time there is a correction. Then again, if we didn't have scared people running around, there wouldn't be a market.

I missed my chance to add more longs this morning as the market was way above my target buy range by the time I woke up. But I have the longs from yesterday and I am now looking at the 50 DMA/resistance to go hedge longs.

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 http://www.ewaveanalytics.com

Short Term Trend = Bearish trend being challenged
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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