What seemed like the start of a sustainable counter-rally yesterday was completely reversed with today's sell off. The 1867-1871 level I've been mentioning was finally reached today but it failed to stop the bearish advance. So now we have a lower low at 1857 and the likelihood there will be more selling ahead. Unless what we saw today is an expanded flat, any counter-rally early next week that fails to take out 1934 will lead to lower lows. I was planning to go long if support held but it did not, so I continue to stay on the sidelines.
The cause for the sell off seems to be energy related as the plunge in oil continues. If $29.50 fails to hold the sell off, it is likely the 2003 low of $25 will be tested. Saudi Arabia deliberately caused the fall in oil prices to drive out American shale oil out of business and they might just succeed in bankrupting many of these American companies. Once shale oil is out of the equation, we should see oil double in price as the demand is still there and continues to grow.
Have a great weekend!
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 = Bearish
Long Term Trend = Bearish
* 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.
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