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.

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 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

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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