Elliott Wave Stock Market Update - October 1

The market finally made a decisive move to the downside and key support was easily taken out. The next support levels are 1942 and 1928, but I think there is a good chance this wave will ultimately test 1904 and possibly start a strong counter rally from there. A test of 1904 or the 200 DMA (currently at 1900) would form a neckline for yet another Head and Shoulders, so we'll see if bears can finally get it done. Still, this market has been in correction mode for a while now and we could see a strong bullish rally given how oversold the market is. The market has rallied every single time the daily MACD has been oversold (7 occasions since Nov 2012) and there hasn't been a single test of the 200 DMA in almost 2 years! Maybe now that there is a case of Ebola, things will be different? I am staying on the sidelines until I see a test of the 200 DMA or if we get a potential bullish pattern.

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 = Bulliss 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.