Elliott Wave Stock Market Update - February 6

Bulls managed to solidify their case by breaking the 2064 resistance and making a higher high for the structure that started at 1980. This makes it a 92 point advance and leaves the market just couple of percentage points from the all time high. We should see a correction as soon as Monday, possibly to the 2025-2030 area but we still have to keep in mind the possibility of a melt up in the stand alone W3 scenario I mentioned yesterday. The bottom line is bears had an opportunity to bring down the market in the past 4 weeks but prices are still above the 50 DMA. And now that oscillators have reset, odds favor sentiment swinging towards the bullish side. What bulls need at this time is a good excuse to rally.

I ended up stopping out of my USO on my raised stop limit for a nice profit. There was a micro count that ended up being overlapping, so I am ok with locking in my profits and not stress about it over the weekend. We should find out soon if the current bounce in oil is a zig zag (which implies another bearish leg) or the beginning of a much bigger bounce. I hope we see another low so I can buy cheap again.

Have a great weekend!

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

Elliott Wave Stock Market Update - February 5

Things got interesting last night as the market went down as much as 15 points. But the market bounced back after Europe opened and then started a rally at the open in the cash market. Technically speaking, the wave in the cash market is the 5th wave I was calling for yesterday. However, if we account after hours, the pattern did top yesterday and a W2 correction took place before the market opened today. So we could one of those "stand alone W3" patterns where the W2 is absent. Elliott Wave theory doesn't account for any of this, so this is just my own labeling. If the wave from 1980 to 2050 is a W1 of a 5 count, then we're looking at a target of 2150.

Oil rallied as I expected today in what should be a C or a W3 wave and that allow me to set my stops to break even on USO. A continued rally or at least stabilization in prices will lend support to a stock market rally. Also, bulls could seize the jobs report tomorrow as an excuse to break out. A bad number will translate into a weak dollar, which will favor earnings. A good jobs number will push oil higher, so technically it's a win/win situation for equity bulls. With that said, the 2064 level needs to be cleared to solidify the bullish case.

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

Elliott Wave Stock Market Update - February 4

The market made a slightly new  high today after a minor correction, so again the 5 count could have completed today at 2054, which is just 1 point short of my original 5 count target of 2055. But I see an expanding triangle on the micro count and that's usually a W4 or a megaphone top, so I'll give the bulls a chance to challenge the 2064 level. Actually, the target for that expanding triangle is 2074 so a completion of the pattern would solidify the bullish case.

Oil fell almost 9% today, which I assume it's a B or a W2 wave. So we should see oil continue to support the market. It's interesting that oil companies barely moved today despite the inventory glut, but what that tells me is that the glut is already priced in. What oil and energy stocks are now pricing is the impact from lower production due to capex cuts. Just like too much investment led to overproduction, not enough investment can lead to an oil shortage. And in a way, this is what OPEC had in mind when they decided not to cut couple of months ago. It was a deliberate move to force out North American oil out of the market and essentially manipulate the market as they always have. So I ended up buying USO again, which I might exchange for oil company stocks but we'll see. My equity longs are doing well, they just need to go up 20% more! lol.

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

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

Elliott Wave Stock Market Update - February 2

The market finally managed to breach its 1988 support and surprisingly bounced substantially before the 200 DMA was tested (The DJIA had a 200 DMA test). So far, we have a clear zig zag in place but that could turn into a bullish W3 tomorrow since the trendline from the descending broadening triangle was broken. If we see the Trend Average recaptured tomorrow in a W3, we should see trade north of 2055 and even a challenge to all time highs given the target for the triangle pattern of 2088. So far all the waves from the 2064 top look very choppy (specially for a bearish W3) and failure to gain traction means this is just another correction. Also, oil has officially turned bullish and could easily test its 50 DMA soon or even $60, giving support to the energy components of the markets and most importantly an excuse to rally.

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


Short Term Trend = Bearish
Medium Term Trend = Bearish

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

Elliott Wave Stock Market Update - January 30

The market had a volatile day today and ended up closing substantially down from yesterday. I assume the 1988 level will be challenged again (perhaps in pre-market?) and if that level doesn't hold, a test of the 200 DMA at 1975 is imminent. However, the waves remain choppy and unless we see a clean impulse to the downside, the market will stage a strong counter rally and break out of the Descending Broadening Triangle in place.

On the bullish side, oil's rally today is the best in almost 3 years (too bad my stops kicked in 2 days ago!) and another close over $46 on Monday will turn its Trend Average bullish, something that has not happened since June 2014 when it was $105. If the rally starts in oil, I expect its 50 DMA to be tested and that technically will bring support to energy components in the stock market. Sellers could hang on to the negative sentiment due to volatility and the lower than projected GDP numbers for the 4th Quarter to continue the sell off. But let's not forget that under current monetary policy, slow growth just means low interest rates for a longer time which is a plus for assets.  So while the trend is bearish and sellers have the momentum, bears have to really prove their case by closing the market under 1975 as the long term trend remains bullish (which btw will be 3 years old next week).

Have a great weekend!

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


Short Term Trend = Bearish
Medium Term Trend = Bearish

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

Elliott Wave Stock Market Update - January 29

The market put in another lower low as expected and it stopped right at the 1988 support I mentioned yesterday before rallying substantially. In an "ideal" bearish scenario, the market should have bounced into a W4 wave before resuming selling towards the 200 DMA. But that's not what happened as the bounce went into what should have been a W1 within a bearish nested structure, eliminating the bearish count and putting the bearish impulse into question. Still, the market has not tested the Trend Average yet and is far below the 50 DMA. So while the trend is bearish, the waves are giving us a mixed picture. Sellers need to breach the 1988 level in order to gain momentum, failure to do so will likely result in bulls gaining back control.

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


Short Term Trend = Bearish
Medium Term Trend = Bearish

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