Monday, March 9, 2020

Elliott Wave Stock Market Update - March 09

Prices fell through support in what is now confirmed as a C or W3 wave. I was hoping we would see the 50 DMA tested first but the market followed the bearish set up I mentioned as a significant possibility on Friday. If the C wave ends up being the same length as the A wave then we should see long term support at 2603 tested before a major rebound. There is also multi-month support at 2728 which the market came close to breaching today. The corona virus has managed to create panic and now the ongoing oil market share wars just adds another layer to the problem. In the end, lower oil prices is good for the consumer but not so good for oil companies. But the corona virus seems like it will be getting a lot worse before it gets better. There are now 34 states with reports vs 20 when I mentioned it on my last update on Friday. Given the current government response (which creates confusion among the loyal GOP followers), this virus will likely continue to spread as it is past the point of containment. Compare how China and South Korea have handled it vs Iran and to a certain extent Italy. China and S Korea were very aggressive with testing, quarantine and public information once they knew they had a problem. Iran and Italy were more unprepared and now the virus is running rampant while China is almost free from it and S Korea is reporting a possible peak. Actually, Italy just announced today a national quarantine which is the last resort method of stopping it. I hate to be a pessimist but we might go through what Iran and Italy are going through right now due to mixed messages by Trump, lack of testing, etc. It will be a rough few weeks/months for us and a technical bear market should come in this timeframe. The million-dollar question is whether this will cause a recession. Personally, I think a recession is imminent as well and that is why the Trump administration is panicking and will be launching stimulus right away to prevent it. If only they were as concerned on how to stop the spread of the virus..

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

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