Tuesday, February 3, 2015

Elliott Wave Stock Market Update - February 3

The market followed through on the triangle break out on a bullish W3 and managed to close over the Trend Average and the 50 DMA. I'd like to see 2064 breached before giving the bullish case the all clear, but so far it's looking like the market is ready for another multi-week bullish leg given the bullish MACD cross on the daily chart. The excuse for the rally is oil (remember when a 7% rise in oil was actually a very bearish event!?), so this factor will probably give support to the bullish case until euphoria takes over.  The micro 5 count could be completed at 2050 and we'll know if we get a Trend Average test. For now, I labeled the micro waves assuming what we're seeing is still the W3.

Oil will likely test its 50 DMA at $55 but I won't be surprised if it goes to $60. Too bad what got me stopped out on my oil position was an expanded flat, but there's really nothing one can do about it when trading against the trend. Whether this oil rally is just a bounce or a sign of a long term bottom remains to be seen, but as I've been saying for weeks, the supply side will end up working itself out and oil is bound to go back up as the world economy continues to grow. So I hope we'll get one final bearish wave eventually to another low to buy some oil companies. I suppose the "sweet spot" would be around $70-80 where consumers get the benefit of cheaper gas and energy companies can still operate at a profit. 

For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit http://www.ewaveanalytics.com

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

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