Elliott Wave Stock Market Update - February 11

The market continues to follow the possible bullish W3 count and it looks like the excuse will be the  Greece negotiations with the EU. I believe waves can predict sentiment but not actual political outcomes, so if Greece doesn't leave the EU we should see the W3 materialize. But if the Greeks decide to leave the EU, then I assume there will be some sort of pattern failure as I can't imagine the market rallying. For now, all trends are back to bullish. Also, oil continued to sell off today and its TA is at risk of turning bearish. But the stock market doesn't really care, I'm sure if we get a big equity rally then oil could be used as an excuse to correct again.

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 = 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 whipsaw

Elliott Wave Stock Market Update - February 10

The 50 DMA has proven to be difficult to breach and it looks like the bullish wave I was expecting started today. I posted the following on the ewaveanalytics.com site over the weekend and it pretty much summarizes the bottom line:

"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. Bears would need to bring the market under 2044 and close below this level to regain some control."

We still need price confirmation to officially label the current wave a W3. But unless the market is doing a flat zig zag, chances are new all time highs are coming as soon as this week. Oil sold off today but the stock market dismissed the move completely, which means oil could probably test its lows and the market will be looking the other way. As I've been saying for weeks, all these headlines on oil, Greece, etc. are just excuses for profit taking. Unfortunately, people who trade on news usually end up holding the bag. Take the front page on the WSJ today, which I just took a picture of. Just when oil tested its 50 DMA and this headline came out, prices plunged. I wish I could have saved some headlines when oil was at $43, but it was the complete opposite with doomers calling for $20 oil..

I am 100% sure a top will come eventually when a thing called a "recession" finally re-appears. But in an environment where the Fed is telling you they are going to raise rates, it pays off to respect the trend and trade with it.

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 9

The market started a correction as expected and we could still see more downside to the 2025-2030 area. The big question is the wave after the correction is over, if it's a W3 then new time highs are highly likely. Oil continues to be support the stock market, but now that the 50 DMA was tested today at $53.92 as I had been expecting, we could see a resumption of another bearish wave in oil. Which in turn could be used as an excuse for the stock market to sell off again. For now, bulls continue to have the upper hand but need a good excuse to start a strong rally.

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 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