Elliott Wave Stock Market Update - August 24

 
"Basically, 2039 needs break for a stronger correction to begin"

This is a classic example of key support breaking and all hell breaking loose. The market had been supported by that key pivot all year long until it finally broke last week. And despite all the panic and hysteria, there was ample warning  something was not right with the death cross in the DJIA and lower lows being put in weeks ago. This correction is lining up well with the LT W4 count and today's lows reached the target area I mentioned last week of 1820-1900. Looking at the short term count and support levels, I can see one more leg down to challenge 1820 since 1905 broke. I'll probably pick up some shares if 1820 gets tested to play the bounce. With that said, if you are planning to go long, watch those support levels and place your stops accordingly. Panic/Manic markets do not care about oscillators.

The catalysts for this sell off are a combination of rate hikes, China and oil. None which are fundamentally damaging to the economy imo (damaging to profits yes since it raises cost of capital to companies), so this is mainly a sentiment driven sell off. Rate hikes implies Fed's confidence in the economy, oil's low prices are essentially a tax cut for oil importing countries and China's 8-9% sell off is just panic selling unrelated to the overall health of its economy. In fact, I have some more money coming in (for my long term account) this month that I will be putting in China shares. The lower prices go, the more I can buy.


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 trend being challenged - change imminent

* 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.

Elliott Wave Stock Market Update - August 21

Finally some excitement in the market! After being stuck in the 2040-2134 range for most of the year, support broke yesterday and selling accelerated as I had expected. I heard on the radio today was the worst day for the DJIA in 4 years, which puts into perspective just how much the market has gone up since the low in 2011. All this time the market had respected key trend support but that level broke today and this confirms the top of LT W3 label on the long term chart. I remember when I first started to project the LT count the targets seemed too high but all the waves completed without a single exception and targets proved accurate (give or take a few percentages). Come to think about it, it's actually amazing a market can follow patterns for a period of years. The last time the LT chart was updated was in December and I'll do the Fib retracement labels early next week to bring it up to date.

Now that the top in May is confirmed, we should be looking for a bottom for the correction. I mentioned a few days ago the 1820-1900 area looked like an attractive target and today that possibility looks very feasible. The short term count looks to me like it's not over, so I am assuming there will be a bounce before another lower low. As it is, the market closed right at support and if this level doesn't hold on the next bearish wave, the next level is 1905. Obviously, it's hard to tell when the bottom will happen but I suspect when the foaming-at-the-mouth permabears get paraded by the media, that will be around the time the bottom will be in. Similar to the case with China right now, while more downside is possible in China, there's a good chance a bottom is getting close with all the "expert" doomers all over the place. So be on the look out for the likes of Marc Faber, Prechter with his DOW 1000, Harry Dent, etc.


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 trend being challenged - change imminent

* 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.

Elliott Wave Stock Market Update - August 19

The ups and downs continue and we are now getting close to September and the market continues to trade in the same range as it has all year. Basically, 2039 needs break for a stronger correction to begin, otherwise this sideways action could arguably be a time correction. At the same time, the market needs to break out of the 2134 resistance if it is to reverse the imminent death cross coming in the next week or two. And to be clear, a death cross is a lagging indicator and there has been cases where the lows where already in by the time this event happened. However, more often than not, a death cross happens before new lows are in and with the historically worst month for the markets approaching (September), there's a good chance things will get very bearish.

I might be at Disney's California Adventures tomorrow, so again I might miss the update as an entire day out in the sun and making long lines drains me. But at the end of the day, seeing your child happy is priceless.

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


Short Term Trend = Bullish trend being challenged
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 whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Elliott Wave Stock Market Update - August 17

The market is making things complicated by closing above its 50 DMA and re-capturing the Trend Average with today's rally. I don't picture a 5 wave count rally to new ATH but it's good to keep the possibility in mind given the bullish set up so far. We'll need to see more than a marginal new ATH to reverse the likely death cross coming to the SP500.

Tomorrow I will be in Disneyland all day so not sure I'll have time to update. I'll do my best to at least post a chart later tomorrow night.

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 whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Elliott Wave Stock Market Update - August 14

I'm going to make this one short since I had a busy day enjoying the summer here in So Cal. Basically, the market is making it harder to label the waves in the past couple of weeks by challenging the bearish trend. It'd be a lot easier if there was a strong sell off next week in all indexes but I get the feeling it's not going to be that easy. I guess after rallying almost 4 years, it's not easy for bulls to give up hope. And who knows, they might be able to pull a miracle but I wouldn't bet on it.

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 trend being challenged
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 whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Elliott Wave Stock Market Update - August 13

The market made a higher high today to test the Trend Average before going back down. I didn't want to label the waves before seeing the next move to get a better idea. A strong sell off tomorrow would make things easier as far as labeling goes but if the downsloping trendline is broken then it will open up bullish scenarios (As bullish as you can get with an impending death cross). Looking at possible targets for a potential bottom to a correction, I like the 1820-1900 support area which is about a 10-15% correction from the May high.

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 whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Elliott Wave Stock Market Update - August 12

The market made a lower low and changed the count I was following. Now that the trend is solidifying to the downside, I have to see what is the best count for the overall structure. Overall, the waves don't have an "impulsive" look to them due to all the zig zags/abc counts, including the wave today which staged a major reversal. But this is an inherent predictive flaw in wave theory (assuming 5 counts are always impulsive and zig zags are not), so I have to see what is the most likely overall count now considering there is a good chance of more downside ahead. The SP500 looks like it will have a death cross in the next week or two as well and we can start speculating for bottom targets once these waves are deciphered. Below is the chart I posted couple of weeks ago on the longer term count and tomorrow I will change the labels to reflect the likely LT W3 top the Fib targets.

Lastly, the recent change in sentiment is tied to the Chinese remimbi (or yuan). Which I think puts the Fed in a difficult spot. Up until Monday, the yuan was essentially pegged to the US dollar and had shared the burden of the appreciating dollar with the expectation of rising interest rates in the US. But now that they have decided to essentially go with the market and let the dollar do its own thing (like Japan, Europe and pretty much everyone), the US dollar finds itself alone and with strong market pressure to continue to appreciate. After all, why would Europeans, Japanese and countries with weaker currencies not buy dollars and park their money here now that interest rates are going higher here than in their QE/0% interest rate home banks. The Fed has to figure out how to fight this flood of foreign currency into the dollar as the more the rates rise, the stronger the dollar will become. As citizens, we get more purchasing power abroad (time to go on vacation!) but this leaves multi-nationals and export dependent businesses in a tough spot.

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 whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.