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Showing posts with label Weekly Report. Show all posts
Showing posts with label Weekly Report. Show all posts

Sunday, February 9, 2014

Market Report: Dow Industrials Top in Place?

To answer that question truthfully, its way too early to confirm the answer to that question. I have posted previously there is still a bullish wave count that suggests a possible move to 14000 before it moves higher and  targets 17000 - 19000, but to those traders that are flexible and can trade both sides of the trend there is plenty of $$$ to be made for those that can find the right set ups.

My last few articles have been prepping readers for a potential setup for a large decline, so far its not disappointed, many members caught a large percentage of the decline, although we were watching a couple of ideas this past week that suggested a rally was due and after 2 attempts we caught the lows last week, so traders made $$$ from the upside as well

Traders that are flexible and have the right setups are making serious $$$, as the swings we have seen recently are a traders best friend, although you still need to find the right setup.

Anyhow back to the setup in hand.

If you have not been involved on the short side like some members have, then you may have another chance later, but short term this appears to be inside an upwards correction to correct the decline


From 16523 it appears to be a 5 wave decline, so I suspect we can see a large bounce to correct the decline, a 3 wave bounce that remains under 16523 is a setup to sell, so readers that are interested in looking to sell this market need to wait for the market to set itself up.
 

Whilst its never a foregone conclusion that we are going to see more downside, if the market has put some sort of peak, then I still think we at least see a move back to 14000 or lower.

So if the idea shown sets up, you have a low risk setup to sell, limited risk with a potential target towards 14000.

If the idea is wrong then its a small loss and live to fight another day, but the key to this idea is to see a 3 wave bounce NOT a strong impulsive move that going crazy to the upside, there is a clear setup we are looking for.

Until next time,

Have a profitable week ahead

Sunday, January 26, 2014

Market Report: Dow Crashes 450 in 2 Days

Anyone reading that headline would think it's some sort of surprise to most traders that the markets crashed 450 points in 2 days, but for us a wavepatterntraders.com we have been looking for a reversal in the markets for a few weeks and it was only a matter of time before things reversed. So it's no surprise to us, it was expected and I expect much more if a top is in place.

Is this the start of the large move lower that I am expecting? Well to answer that question honestly, it's too early to say, but regardless of the answer, what we can say for sure is that if it is the start of something sinister, we will be riding it lower.

In my last few articles I left readers with the idea of a potential JPY carry trade reversal. The analysis holds true today as it did the end of last year. I am a big believer that if the JPY carry trade unwinds, we will see much more downside in the markets, it will make last week look like a picnic, if the markets have indeed topped out as we expect they have, then its only just getting started. I urge all bullish traders and investors to pay attention to the JPY carry pairs, particularly USDJPY, those that understand the drivers of the market should be fully aware that the past 12 months it's the JPY carry trade that has helped stocks push to current levels.

Just as the markets move higher due to the borrowing of JPY, they can easily reverse lower as margin calls get called in as the selling forces more and more sellers to cover those margin calls. It's a self-fulfilling spiral that once it gets going is very difficult to stop until the sellers have been washed out.

SPX long Term

Preferred Idea

SPX Long term Preferred Count Chart
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I have posted this chart before, but as a recap I will post it again. If the trend from the March 2009 lows is only a 3 wave move, then the likelihood is that it's a B wave of a possible expanded flat pattern.

For those traders that argue that the March 2009 lows will never be seen again, I merely suggest you check the history of the markets, 2 examples are the 1966-1974 bear market, the market made a new high in 1973 and then made new lows, the other example which many investors are probably aware was the decline from 2000-2003, which made a new all time high in 2007, then subsequently crashed under the 2002/3 lows.

I think it's very naive to outright say there is no chance that the US markets can't revisit the March 2009 lows.

Look at it like this, when Gold was at $1900, I bet many thought it was a sure bet 100% that Gold was going to $2000, so at the time if you said Gold seeing $1180 was a possibility most Gold investors would have laughed in your face, 2 years on and Gold investors are not exactly pleased.

Put yourself in the position of those Gold investors, do you think that US stocks will be going up indefinitely?

And there is no chance of a move lower?

Bullish Alternative Idea

SPX Long term Bullish Alternative Count Chart
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Even if I am wrong and this will end up being a 5 wave impulse from the March 2009 lows, that still implies we will see a 4th wave pullback, so a large move back towards Dow 14500, SPX 1550 should be seen. Do you really want to be caught holding the bag and suffer a pullback to 1550SPX?

Short Term

SPX Dhort-Term Chart
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The 1st bearish clue would be a 5 wave decline from the highs; Friday's mini crash suggests it's still inside a small 3rd wave, so we want to see a 4th and a 5th wave to complete a 5 wave impulse wave, if that is seen it will be a strong clue of a trend change, the minimum target would be 1550SPX.

Whilst we don't have any crystal balls we do have a mine in the sand, if the market continues lower as we expect then we will look to see the bounce for a 4th wave and look lower for a 5th wave, then we should see a corrective 3 wave bounce as shown.

All is not as it seems

If you look around the globe and "under the hood" you can see all is not as is seems, whilst some US markets have made new all time highs, that can't be said for many other markets.

XLF

XLF Chart
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If you look at the XLF we can clearly see that it's lagged the SPX and by any criteria you want to choose in my book that's a bear market rally. We can clearly see it's a 3 wave bounce, so by definition it's a corrective bounce in Elliott wave terms, furthermore it's virtually met its measured move target where [C] = [A].

SPX versus XLF Chart
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Not exactly screaming a bull market is it?

We think the XLF could be a great set up to sell, if it's just put in a peak, and topped, then I am expecting a strong move lower. That's one sector I suggest readers watch for weakness.

NYSE

NYSE Chart
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The NYSE is a very important US market and is often over looked, but as we can clearly see its only "just" tested its Oct 2007 highs, if that's a simple double top, then we could be on the verge of a strong move lower, again another market I think investors and traders should be watching.

Do you notice the look? It appears to be in 3 waves and only just above the measured move target where [C] = [A], so whilst the SPX and DOW have got all the headlines if you look around thins are not what they seem.

Around the world

What about other markets that "used" to closely follow the US markets?

CAC40

CAC 40 Chart
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That sure looks like a 3 wave bounce to me, if you are an Elliottician and reading this, I will gladly debate the merits of a potential 5 wave move from the March 2009 lows, because I can't find a way to label that even remotely as a potential 5 wave impulse wave, it's a clear 3 wave move, so in Elliott wave terms a corrective bear market rally.

Incidentally we think this a great market to look to sell and if we can count a small 5 wave decline from the highs then we have a strong clue of a trend reversal, I am targeting 2500, so plenty of downside.

There are many other markets and stocks that suggest the move from the March 2009 is a 3 wave bounce, a 3 wave move is important to Eliotticians as it suggests it's a counter trend bounce.

So you are probably thinking, well you have just picked the markets to curve fit your bias. Why don't you pick a market that has made new all time highs?

Let's do that, what about the DAX, is that ok with you?

DAX

DAX Weekly Chart
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Do you notice the look; it sure looks like a 3 wave move to me. Do you see a 5 wave move there? Furthermore it is only just above the measured move target where C = A.

So whilst it's made a new all time high, it can be considered a B wave of an expanded flat pattern and if the pattern is correct we should see a strong move lower.

DAX Monthly Chart
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I have been targeting this box area for a few months, but if the DAX fails to continue higher and we see a closing print under the top of the box, I would consider that as a bearish sign, especially if we see a bearish candlestick such as a shooting star or a bearish engulfment, on a monthly scale that's a strong signal.
Now let's look at what is happening in Europe.

DAX versus CAC and EURSTOXX Chart
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The CAC and EURSTOXX50 sure don't look like a bull market to me, what do you think?
So having followed each other for years, we finally see a divergence between the DAX and the rest of Europe; I would say that's a pretty convincing statement to say something is wrong with the move in the DAX.

Whilst we will trade the markets both long and short, when you look at the bigger picture around the rest of the globe, both in stocks and other closely linked markets, it sure don't look like a bull market in many other sectors and world markets.

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Conclusion

The markets potentially have a peak in place, the evidence last week was encouraging for the ideas we have been using, however we need to see a 5 wave decline 1st from the all time highs, until we have that we don't yet have a strong clue of a trend change, if we do see more downside, it's likely to be much larger move that many think, with so many traders now addicted to buying the dip, Its sure to surprise a few traders, as it did last week.

Until next time,

Have a profitable week ahead.

Saturday, January 11, 2014

BRK Vs SPX (Where Buffett goes so does the SPX)

The title says it all.

I am not sure who leads who but the one thing i want to point out is that BRK is basically the SPX, well it has been from the 2009 lows.

If you overlay both markets you can clearly see that.


So that brings me to the point of the post.

If you look at BRK it appears to have failed to push to a new high, i was actually expecting it to move higher in alignment with the SPX moving towards 1850SPX, but we may have a truncation in place.



The prior price action appears to be a small triangle, which i suspect is in the position of a 4th wave in a 5 wave sequence from the 2011 lows. If BRK has just truncated, and we see more weakness, then it should not be long before the SPX follows based on the correlation.

My primary idea is this is a simple 3 wave bounce from 2009 as shown in black, my alternative idea is that the high we just saw is wave [3]. So i am still expecting a pullback towards $100 (BRK.B) if the idea in blue.

If BRK pulls back then by default the SPX should/will pullback.



Seeing $100 on BRK.B is around 15%. So if we slice 15% off the SPX that's around 1550-1570 SPX which is the target i would be expecting for my alternative idea on the SPX (not shown).

Until next time,

Have a profitable week ahead.


Monday, December 2, 2013

Market Report: Clues From The Dow Industrials

In my last article I was looking for a reaction from the 1750SPX area. The continuation of the move higher has again forced me to reconsider other ideas.

In my last article, I was initially looking at a possible ending diagonal on the SPX (bearish wedge to non Elliotticians) but as I re-evaluated price structure in the other main US markets it became much clearer that the pattern in the SPX was not an ending diagonal as I initially thought, but some sort of ugly unorthodox flat pattern.

Although technically the ending diagonal pattern is still valid, but in light of the evidence in other US markets I decided to adjust the pattern to reflect the ideas on the Dow Industrials as well as the Dow Composite.

Bearish Idea

The move off the March 2009 lows currently counts best as a 3 wave move; I can count a 3 wave move, which in my opinion is very close to a reversal.
SPX Chart
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Since my last article the SPX has moved just over 50 points, however the angle of the advance looks wrong for the previous ending diagonal idea. As I mentioned earlier, the patterns on the Dow industrials and Dow composite show a much clearer idea, which I think are important clues.

The SPX is slowly coming into a fibbo price time target I have been following. But without a reversal clue, this grind can push higher than the bears can stay solvent. Although we have been following the short term charts higher, it's now I think once again that a possible reversal can be seen, it's this area that an important reaction could be seen.

You can read the rest here:  http://www.safehaven.com/article/31974/market-report-clues-from-the-dow-industrials

Sunday, October 13, 2013

Market Update: Wave 4 in Place?



Last week I left readers with the idea that I was looking for a low for wave 4, of what I believe is an ending diagonal on the weekly chart of the SPX.

See here : http://wavepatterntraders.blogspot.com/2013/10/market-report-set-up-of-lifetime.html

We got the gap down I suspected, although it did run a bit lower than I initially targeted, I was looking for around the 1660SPX area, it over ran that move, but like all good “flushes” they tend to squeeze out most traders right before it reverses.

Last week’s rally was actually expected by us, as we were looking for wave 4 of the ending diagonal idea, however the strength was something that did surprise me, although with the bearish blogs proclaiming the end of the world again, its set up a great bear trap for most of the participants, thankfully not us.

This is exactly why I focus on price and patterns and not the news, most traders get bearish at the lows and bullish at the highs, we went into last week looking for a low as I still feel this market will see a new all time high.


Before
 





After



The powerful rally last week suggests that is still to be the case.

Short term there appears to be a 5 wave advance off the lows made last week, so we should see some sort of pullback early next week. Providing any decline remains above last week’s lows at 1646, then I still think we can look higher and target 1735-1750SPX.

So readers/traders can look to buy into any corrective decline, ideally around the 1670SPX stops at 1646SPX.

With the large swings, I suggest using options as the market volatility is picking up and we are seeing large moves, and traders need to adjust to that.


Before



After



Only a reversal back under last week’s lows would negate the set up.

An alternative idea I am also watching is that of a possible new all time high, but in 5 waves not in 3 as the prior idea would need.



This would suggest the advance is now in wave [5] and likely target above 1750SPX, again any decline would require to remain above 1646SPX.

I will leave it there for this week.

Until next time,

Have a profitable week.