Friday, September 5, 2014

Elliott Wave Stock Market Update - September 05

The market was able to stage a decent counter rally today after bouncing off 1990 support, so there's a good chance the "head" is forming for an H&S. Obviously,  it is very early to speculate on this pattern but we've spotted quite a few on here during similar stages. I went short anyway just in case but my stop is the all time high at 2010, so we'll find out early next week if the market has enough momentum for another ATH. Once the top is in, we will have to start guessing how strong the pullback will be. I just read some research from Deutsche Bank about 10% corrections and it makes me wonder if we are even going to see one until the next recession. It's been 563 days since the market pulled back 10%, which is longer than average. However, there was an 1800+ day streak in the 90's and a 1200+ day streak that started in 2003. Therefore, we might continue to see shallow pullbacks and then more rallies. According to the article, 10% corrections tend to cluster around recessions and economic crises, which makes total sense since the stock market is a reflection of the underlying profits of companies being traded. So as long as the economy is growing, put the your money in the markets. Also, another factor that might contain pullbacks is the just announced QE in Europe. A lot of that European money is going to flow to the US and Emerging markets, creating a favorable worldwide environment for stocks. Whether QE will work in Europe is another question, but given the US example, I think they will manage to prevent deflation and create enough liquidity for growth. Bernanke is looking like a genius now days as he was the chief architect of this formula.

Have a great weekend!

For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit

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 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 Analytics

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