Stock Market Update - May 17

The market bounced today as expected and has formed a right shoulder of an Head and Shoulders that targets 1827. The bounce could go up to 1885-90 on Monday before another bearish wave that will break the 50 Day Moving Average for good. If the 50 DMA is lost decisively, chances are the market will visit the 200 DMA sometime in the next few weeks. The only thing that can change the bearish set up at this point is a rally to turn the trend back to positive and make another all time high which looks unlikely to me at this point. But obviously, I'll prepare for the unexpected as nothing is 100% in this game.

I am no longer long on my trading portfolio and for the first time in a long time I am short (I don't even remember the last time I was actually net short). My stop is set at 1905 so we'll see how that works out. I might mix things up a bit with shorts in the small caps but I have to take a good look at the RUT first this weekend. For further analysis on RUT, NASDAQ, DJI, Gold and Oil please visit http://www.ewaveanalytics.com

Have a great weekend!

Short Term Trend = Bearish
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.