Friday, October 31, 2014

Elliott Wave Stock Market Update - October 31

"every single time the market has been this oversold in the last two years, we've seen rallies to new all time highs. Will this time be different?"

I posted this on October 2nd and it looks like the pattern is repeating itself. Technically, the market made an all time high in pre-market and closed within a point of the all time high in the cash market. But on the DJIA and the Nasdaq, they both closed at new highs for the year (ATH in the DJIA). So it looks like the market will continue making new highs for the remainder of the year, with or without a pullback. If the market can correct to 1912-1925, we would have a big Inverse Head and Shoulder's set up with a target of 2220 and would fit in well with a Christmas and January rally. However, if the market punches through resistance again (2019), this wave could go parabolic to 2220 without a significant correction. The medium term signal has turned bullish, so now it is all clear for bulls. I am enjoying the longs I bought in the upper 1800's, but my hedge at 1973 is starting to worry me as I wasn't able to stop out at 1999 as the market gapped up towards the 2019 resistance this morning. Hopefully, I'll be able to get out of it without much damage by position trading or better yet on a correction towards the Trend Average.

The excuse for the rally today was the Bank of Japan's unexpected QE announcement, which helped push the Nikkei to a 52 week high. But the rally there was already in the works, so it's not really a surprise.  Also, China's SSEC is also at a 52 week high and challenging a multi-year resistance level. So we have the first, second and third largest economies in the world at 52 week highs. Which tells us, we might be seeing the start of another significant bullish run that will last for a while. The economies of Europe and commodity dependent countries (notably Russia) are not faring as well, but I don't think they will be able to stop the momentum being built up by faster growing economies. 

Have a great weekend and Happy Halloween!

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.

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