Elliott Wave Stock Market Update - January 22

The market had its first sell off after rallying almost non-stop for 3 weeks. The low today tested the 50 DMA before bouncing back towards the end of the session. If the coming rebound fails to make a higher high then the market will be setting itself up for another sell-off so a bounce might be a good opportunity to short given the risk-reward ratio using the recent high as the stop.

The excuse for selling today was the apparent economic slowdown around world and the ongoing issues with China. The current economic expansion in the US that started in June 2009 is the second longest in history and 5 months away from being the longest one on record. So technically, we are due for a recession soon regardless of whatever the cause might be. Maybe it will be a full blown trade war with China that will tip the balance or the ongoing government shutdown will end up damaging consumer confidence or maybe both? I think Trump is underestimating the fact that China can withstand a slowdown while the US goes into a recession that will make it impossible for Trump to get re-elected. Most consumers don't want a trade war, this is all Trump's idea. Just like the government shut down is affecting almost a million workers who are going without pay. I am sure people going without pay would appreciate the government paying them for their work but unfortunately they are being used as political pawns. Instead, maybe Trump should use the $4 billion in annual arms procurement aid to Israel and use that as leverage instead or anything that doesn't involved hurting people that are working.

For further analysis on the NASDAQ, DJI, RUT, Gold, Silver and Oil please visit http://www.ewaveanalytics.com

Short Term Trend = Bullish
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