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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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.

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