Stocks Close Back Above Support; Euro Finishing up Flat Correction

Internals were strong as far as advancers vs decliners although volume was light at 881 million NYSE shares, much less than yesterday.  Regardless of total volume, the strength seen internally today suggests further upside.  But we'll see.

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Stocks Failing to Follow Through to the Upside; Euro Looking Vulnerable

Internals posted above.  You can see there is light volume today suggesting a lack of enthusiasm towards moving the market higher after yesterday's surge.  But closing higher on the day has kept me on the sidelines from getting short.  The short term has a slight bullish bias to it while the longer term indicators are slanted to the bearish side (especially momentum).  Below is what was posted mid-day today.

Stocks Indecisive, but Price Action Looks Corrective; Euro Resumes Downtrend

Internals today were fairly bearish and volume hit the 1 billion share mark on the NYSE, no doubt options expiration played a big part in puffing that number up  The first and last 30 minutes of trading pushed the market down towards the triple digit level on the Dow, closing barely in double digits at -93.  The first and last 30 minutes are usually when options expiration factors are the strongest.  Outside of those two timeframes, the market was fairly flat.  Tough to get any solid conclusions from this action in my view.

Stocks Slump; Euro Falls

Internals were very bearish today with down volume well exceeding up volume and advancers vs decliners on the NYSE and S&P heavily negative.  But total volume on the NYSE was quite light at only 865 million shares.  In the bigger picture, the internal structure of the decline over the past several weeks feels corrective.  But that doesn't mean it can't continue lower in the short term.

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Stock Trend Remains Down, Although a High Confidence Wave Count is Elusive; Euro Trend Down

Today's action was bearish in my view.  The internals showed mild total volume, but not as light as earlier in the week when we were in the 800s million shares.  But up vs down volume was only slightly bullish and the advancers vs decliners were mildly bullish.  Yet you'd think the market would look stronger than that internally since the whole trading day seemed like it had its rally jets on as it continually floated higher.  But it didn't.  Today' rise appears corrective when looking at it internally compared to the price action.  And when you add the fact that the gains the market made today fell apart sharply at the end of the day, price action also lends itself to a bearish day.  So even though the markets closed up today, it was not an impressive move higher by any means.

Stock Downtrend Tested Today; Euro Extends Correction

Stocks' downtrend remains intact by the skin of their teeth.  Today's rallys stopped short of making a new high above 1346.82 in the S&P.  So the series of lower highs and lower lows is still in place, and therefore the downtrend remains in place.  Shorting here against 1346.82 would be a good risk/reward trade for the bears.  Although in the bigger picture, with no clear wave count in place, and certainly nothing impulsive looking, I think this downward action lately is all part of a correction that will result in a move to new highs on the year eventually.  So if I were short, I'd play it tight here and only for the short term action.  Longer term the market still seems bullish.


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Stocks Punished After Hitting Resistance; Euro Poised to Fall Hard

Stocks took a pounding today with the Dow losing almost 300 points and S&P losing over 30 points and closing on their lows.  It was an across the board selloff as all the major indices/sectors were punished with exception of the safe haven sectors Staples, Utilities and Health Care down the least.  Internals in the overall market were also bloody as declining stocks, and declining volume, well exceeded the advancers.  Normally there is a relief rally after such a bloodbath internally, especially since today is the first day of a new month.  But seeing as that the downtrend was held intact yesterday by failing to make a new swing high, and today's S&P close was right at support, it's quite possible we'll get some good follow-through to the downside tomorrow, especially in the morning.

Headlines are Doomy and Gloomy

News headlines are looking awfully bleak this morning.  I said yesterday that I expected some follow through to the downside this morning and I'd take profits when that happened.  Well that's exactly what we got, and taking profits seems like a good idea with these gloomy headlines above.  I'd still keep some position on short, but I'd trail the stop down with the market.  It's approaching oversold on at least a short term basis pretty soon.

Bottom line: The market has fallen so much so fast that we are approaching oversold on a short term basis.  When you combine that with the gloomy news headlines we see this morning, I'd like to take some profits here to protect gains, and then trail my stop lower as the market heads lower.

PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK. at6/02/2011 12:06:00 PM

Stocks Remain in Downtrend

Stocks continue to trade horribly and so the downtrend remains well intact.  The bulls were at it again today, trying to put a floor in this market and surge the market higher.  However the rally stalled late in the morning and flip flopped around until eventually collapsing into the close.  The buying power just isn't there, and yet there is no panic despite the constant selling pressure the past few weeks.  Bottom lin: expect the market to continue lower for at least the short term as it keeps the trend of lower lows and lower highs intact.

The euro is still looking farely strong although starting to show signs of possible weakness.  But right now they're only "possible signs" of weakness, nothing convincing.  Momentum has started to diverge and the euro is having a hard time sustain its recent strength on the surges higher.  Once I get a reversal bar or impulsive decline, I'd be slamming the short side on this.


PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK. at6/07/2011 06:19:00 PM

Euro Catching up with Stocks

Nothing has changed in my outlook on stocks.  They continue to trade heavy and the trend is still down.  Some indicators are now oversold intraday, but there's usually a lot of divergence occuring before a meaningful bottom gets put in, and that's not there quite yet.  Stocks may bounce in the very short term, but the trend remains firmly down regardless.

The euro appears to have finally topped and is now going to play catchup with stocks to the downside.  Looking above at the 2hr euro chart you can see a strong rally leading into a head and shoulders topping pattern.  This is a good sign the euro has toppped.

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Stocks Still Struggle to Mount Rally; Euro Completed 5 Waves Down from High

The S&P has completed a 3 wave rally to a new high, and has so far only completed 3 waves down from that high.  Volume and intensity on the decline are a bit tepid so I'm still concluding that this current weakness is just a correction of a larger bull move higher.  That could change though with some sustained sharp declines with increasing volume and bearish internals.  But right now, the market is in a temporary downtrend that doesn't appear over quite yet.

The best guess here is that the market is unfolding in a "flat correction", which is derived from the 3 wave rally to a new high.  According to EWP, this type of behavior lends itself to flat corrections.  So that means a 5 wave decline for wave C within that flat correction is underway now.  So the market should hit, and perhaps slightly exceed, the 1250 level before bottoming.  The action surrounding 1250 will be important to the bigger picture.  A sharp reversal and rally near that level will make it probable a bottom is in and that the market is on its way to new highs on the year.  But if the market accelerates the downtrend and drops significantly through 1250, it may mean a bigger decline is underway than expected.  So I'm watching the action around 1250 closely.

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Stocks Working Toward 1250 Support; Euro in 3rd Wave Down

Internals today were solidly bearish.  Everyone was a seller today, and all day.  Yesterday's rally was a sucker's rally.  No capitulation, no bottom.  Volume even picked up a bit today after yesterday's big move higher.  The bears remain in control.

Below is what I posted this morning:

Euro and Stock Bear WARNING

Price action today in the S&P and the euro suggest a possible bullish reversal just took place which might act as a floor for these markets for at least a few days.

Downtrend May Have Been Broken in Stocks

A little over a week ago I issued a warning to the bears because there were signs in place a bullish reversal was in the works.  With several trading days printed since then, we can see what I was talking about more clearly.  You can see that the downtrend from the high on the year was not impulsive looking, so we had to look to another method of determining the trend and short/long term outlooks of that trend.  The best I could come up with without the help of EWP, was looking at the set of lower swing highs and lower swing lows defining the trend.  And that's what we've had.  But since the reversal took place a week or so ago, you can see that the market failed to make a new low, and then made a new high recently.  This spells out even more danger for the bears right now since this is the first solid sign that at least the short term downtrend has broken.

Since we don't have an impulsive decline yet, and so far there's only a choppy 3 waves down from the high on the year, this recent development in swing highs/lows makes bearish positions very risky here.  A break above 1311.80 would solidify the entire decline from the highs on the year was a 3 wave move, which is corrective, and that new highs were right around the corner.  Staying below 1311.80 keeps the bears hopes alive, but it would take a new low to rejuvenate the bears' chances and create what could be interpreted as an impulsive decline.

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Stocks Should Get to New HIghs on the Year Soon; Euro Faltering

Keeping it simple and looking at the pattern of swing highs and lows earlier this week paid off.  Once the series of lower highs and lower lows was broken, the market has been surging higher and higher.  Those who followed that made a nice profit very fast.  So it looks like the recent decline was a 3 wave move, a correction which I labeled ((a))((b))((c)).  So stocks should be working their way to new highs on the year shortly.  It's possible we get another down leg to a new low if the correction decideds to turn into a double zig-zag, but it would still be a 3 wave move, giving us the clue we need to know the larger trend.  But seeing as this correction for a Minor wave 4 is already quite large compared to its brother Minor wave 2, I doubt wave 4 will materialize into anything larger. So look for the uptrend to remain intact in the coming days.

Although it it's a little late to get bullish here at these levels, it does seem the path of least resistance right now is up.  I'd be bullish, or on the sidelines.

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Medium Term Outlook for Stocks, Euro, Clearer than Long Term

Internals were flat today and volume was extremely low at 819 million shares on the NYSE, so enthusiasm to buy the rally here has waned.  I think that a small decline or some sideways action the next few daysmight be in order.

Friday's Decline May be Sign of Significant Reversal

Although it is a laid back summer Friday, today's decline may signal a significant reversal is at hand.  I thought the major indices would march to new highs before any significan reversal but today's action may mean things fall a bit short of that target.  The Nasdaq 100 is the only major index that made a new high.  The Composite, Dow and S&P did not.  That in itself is a warning sign for the market since only the higher risk speculative tech stocks were able to make new highs while the big blue chip solid names failed to do so and dipped out of the rally early perhaps.

It is a Friday so I don't want to get too excited about the action today.  As always, the way the market closes will be important.  Closing on the lows would be a good sign a significant reversal is in place and that the bearish side should be favored for short term players, while a sharp rally into the close getting the indices to even or in the positive would favor the bulls.

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Stock Outlook Mixed; Euro Breaking Down

Late last week we saw some topping action that suggested weakness going into this week.  And we got it.  But it may be over now.  There is still a clear 3 wave decline (ABC) from the high on the year in the S&P, so a new high on the year seems likely.  We can't forget that.  Only the Nasdaq 100 managed a new high while the other major indices failed.  Now, the rally from the wave C low looks impulsive, with the recent weakness this week being a wave ((iv)).  If correct, stocks should be on their way to new highs on the year soon.

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Euro Set up Nice for Bears Here

Stocks Flip Floppin Around, Indecisive; Euro Should Move Lower

The internals today were slanted heavily on the bearish side despite the late day comeback in stocks.  90.6% of total NYSE volume was to the downside and there were 2,569 decliners and only 446 advancers.  But volume overall was very light at only 871 million shares traded.  Not typical of a large 3rd wave down starting as some wavers may be leaning towards at the moment.  That's not to say they're wrong, I just don't see the evidence here.  First you have a 3 wave decline from the high on the year, then it flip flopps around on light volume......that doesn't seem like a big 3rd wave kick off, but we'll see.

Excluding the wave count, the bears can hang their hats on two things in my view:

1) the S&P has formed what looks like a head shoulders top on the daily chart.

2) the Nasdaq 100 has diverged from the rest of the major indices and made a new high on the year and that divergence has now been in place for several days, often a subtle indicator of a trend reversal in the overall market.

So the wave count and internals don't support a big decline is starting right now while basic techincal analysis does.  With an indecisive and unclear market structure, I choose to stand aside until things clear up a bit.

EURO

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