Thursday, January 7, 2016

Elliott Wave Stock Market Update - January 7

The market put in a substantially lower low in what seems like either an extended 5th or a 3rd. Assuming we get a bounce tomorrow, we should get a better idea if there is more selling ahead or we are going to see a rally to the Trend Average. This substantial low makes it difficult for bulls to regain their relatively comfortable position in late December and opens up an opportunity for bears to take advantage of current sentiment. The reason for the sell off is again China which is suffering from retail investor (speculator is a more appropriate term) panic. This is the same crowd that went crazy buying earlier last year so the less the government intervenes, the better as the market will take care of the situation. One of the reasons I invested heavily in China years ago is because of these wild mood swings when it left very profitable companies trading at or even below book value. They currently are valued higher but still significantly below others in the world, so it's a matter of time before market value catches up with intrinsic value. As an example, the Bank of China (8th most profitable company in the world) trades at a PE of 4.5 vs Wells Fargo's PE of 12. Both banks earn about the same and the BOC actually grows faster and pays triple the yield at 7%+. This is why I am invested there in the long term despite all the manic-depressive swings and might buy more bank stocks if they continue to panic.

Anyway,  I haven't bought any shares yet but I will probably start buying Russian shares tomorrow for my long term portfolio and maybe play the bounce in the SP500.

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

Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bullish trend being challenged

* 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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