Friday, May 10, 2019

Elliott Wave Stock Market Update - May 10

Markets made lower lows today below the 50 DMA but were able to reverse all losses by the end of the day. Still, the market was down -2.18% for the week and there is still the possibility of another low next week. Whether the current correction is China related or just seasonal (Sell in May and go away!) is up to debate but we could be seeing the beginning of the summer correction. Now, on the issue of China. The US has the leverage of being the largest importer in the world and in that sense is able to dictate some terms. China wants to sell in the US and it doesn't want to damage its standing as the largest exporter in the world. At the same time, China grows as twice the rate of the US, sometimes it's triple the rate and it's just a matter of time (less than 5 years) before China becomes the largest importing country in the world and at that time, the US will need access to China more so than right now. China is not going to just concede advantages to the US which forces them to do the same for other countries. After all, the US is a bit under 20% of their total exports so it's a substantial chunk but not necessarily the main market. Trump wants immediate results, China looks 10, 20 or even 50 years down the road so I think in the end this issue will not be resolved in the way Trump hopes for. Maybe, this trade issue and the tariffs (basically a 25% tax on American consumers) will be the catalyst for a long awaited bear market or even a recession. This ultimately benefits traders who have been waiting for a long time (me) for assets to come down. I have been accumulating cash and I am ready to buy more China stocks and/or US real state and stocks during a bear market.

Have a great weekend!

Short Term Trend = Bearish
Medium Term Trend = Bullish
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

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