Monday, October 13, 2014

Elliott Wave Stock Market Update - October 13

The 200 DMA was not able to hold the selling today and an important layer of support in the 1880's was broken as well. From the wave perspective, it looks like the market is trying to find the bottom of an expanded flat (A=1904, B=2019, C = 1974?) or it is selling on some sort of W3. Looking at technical indicators, the market is extremely oversold and is due for a strong bounce or even the start of a new bullish rally. I remember last year around November, when I thought the LT Int W3 had finished, the market was going to test the 200 DMA at the very least to confirm a LT Int W4. But that test never came and perhaps this is the LT Int W4 correction that was supposed to come last year. Which implies this bearish structure will find a bottom and then we will see LT Int W5 to new all time highs. The fundamental picture supports a correction and not a sell off in my opinion and I think the market will be reminded of that now that earnings are going to be reported. The current excuse for the sell off is the possible slowing of worldwide growth, given Germany's exports contracted substantially in last month, which in itself is not a surprise given Russia is one of their main trading partners. However, China just surprised to the upside yesterday on both exports and imports but that went mostly unnoticed. So given the fact the US is growing at or slightly above projections,  China continuing 7%+ growth, I think the whole thing is just an excuse and the markets will stabilize and rally again. I think once Marc Faber or any one of those always bearish "experts" appear on CNBC to scare the public, we will be able to confirm the

I went long early morning after seeing a 30+ point reversal (which I thought was a micro W1) from pre-market lows, but ended up getting stopped at 1880 for a -1% loss. However, I went long again at the close with a stop at the next key support level, so hopefully the market Gods will be kind to me in the next few sessions. Obviously, this is a counter trend trade so I'm looking to sell rallies until key levels are recaptured.

We will be making trade recommendations this weekend on the EWA site. For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit

Have a great weekend!

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.

No comments:

Post a Comment