Tuesday, January 20, 2015

Elliott Wave Stock Market Update - January 20

The market closed right below the Trend Avg again and it has a potential to gap up or rally tomorrow in a bullish W3 that will bring the TA back to positive if the move is strong enough. It seems like traders are starting to price in QE in Europe, so we'll find out in a couple of days. Obviously, if the ECB disappoints (I don't see why they wouldn't implement QE under the circumstances) then the markets will find the excuse to re-visit the double bottom. But other than that, I don't really see much of an excuse for a deeper sell off at the moment. Some people were focused on China's 7% "crash" on Monday, but it seems like they did not notice the 70% rally since the low last year without much of a correction. I remain fully invested in China and I actually hope the SSEC will come down to 2600-2800 so I can exchange my H share holdings for A shares. I am betting the SSEC will eventually go into a bubble by trading close to multiples seen in 2007 (PE 45 vs PE 12 today). Most people have not yet fully grasped the size of the Chinese economy and the potential for its stock market to become the biggest in the world. In my opinion, it's just a matter of when and not if given current trends.

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 whipsaw

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