Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
NATURAL GAS BEGINS UPSIDE BREAKOUT MOVE - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stock Market Correction or Continuation? Market Will Answer Very Soon

Stock-Markets / Stock Markets 2010 Mar 30, 2010 - 11:28 AM GMT

By: Steven_Vincent

Stock-Markets Best Financial Markets Analysis ArticleBullBear traders have been long US equities (with the exception of a brief 2 day interlude) since the February 5th bottom.  We took half of our profits in anticipation of a minor wave 4 correction but we continue to hold 50% of our long positions with an eye towards a mid-late April wave 5 of 5 top to the major Wave 1.




The SPX has fulfilled its February reverse head and shoulders bottom target and should have commenced a wave 4 correction.  The type of correction seems to be in doubt and there remains the possibility that wave 3 has not yet completed and will extend to a double top at 1180 or even to whole number resistance in the 1200-1205 area.



The above 3 wave zig zag correction would be the most convenient and expeditious for the completion of the wave 4 correction--but since when did the market ever make things easy for traders?  Here's a closer look at two views of possible corrective wave structures: a zigzag and a flat.





We should have a clearer picture after Tuesday's action.  The 1174 area is key.  A move that closes an hourly bar above 1174 is likley to produce the flat, double top correction and a weak open and selloff will likely manifest the zigzag pattern.  It is also possible that wave 3 will extend to the next level of resisitance in the 1200-1204 area, however, breadth and sentiment indicators are (or at least were as of the weekend) sufficiently overbought to warrant the wave 4 corrective action.  In any case, BullBear traders have been warned to not short this action since it is too choppy, shallow and brief to trade successfully (except as a daytrade).  We want to be in the best possible position to buy back our shares for the final wave 5 of 5 advance to 1228-1244.  That should mean 100 points of profit on the SPX from a 1144 bottom.  The 1228 is exactly the 61.8 Fibonacci retracement level of the bear move from the all time high in 2007 as well as the 23.6 Fibonacci retracement level of the bull market from the 1982 bottom.  There is also horizontal price congestion from 1999, 2001, 2005, 2006 and 2008 at that level.  The 1244 level is the target given by the reverse head and shoulders bottom  that began formation in November of 2008.  By that time and price full bear capitulation will have taken place and breadth and sentiment indicators should be quite overbought on all time frames, setting up the most significant decline in time and price yet seen since the bottom in March of 2009.  Based on the wave structure and available supporting evidence at this time, such a decline will likely be a corrective A-B-C Wave 2 rather than a resumption of the prior bear trend.

In the last BullBear Weekend Report, I called for a big upside breakout in USD.JPY.  We sure got one.  This is the beginning of a major trend change after a multi-decade bottoming process.  Yen weakness may also signal that the Yen carry trade is back on and another liquidity pipeline may be back in service.  This can only further fuel the newly emerging asset price bubble.



The Weekly chart shows that major long term trendline resistance and the 50 week EMA are close to being taken out.  These are major technical events.



After a major bottoming pattern failure and a failed breakout of the major downtrend, the Euro has rallied straight up to technical resisitance.  That the rally has not been immediately rejected may be bullish.  On the other hand, the pattern failure is a major technical event and its bearish implications will not be easily overcome.



BullBear traders were warned of an impending breakout in crude oil as well, though I was not quite sure of the direction of the breakout.  Today the market asserted itself to the upside and the move, unlike many preceding it, held.  The 20 and 50 EMA's are now rising together in bullish alignment.  Let's look for a long entry on any retracement to the $81.70 area.  Stop loss is a close below the 50 EMA.  A weekly close below $81.70 would raise a caution flag on this market a set up a possible short sale opportunity.



Gold carving out another reverse head and shoulders bottoming process.  I suspect that we will see further weakness to the 1098 area where gold would then put in the peak of the right shoulder and become a strong buy.  That's also the 23.6% Fibonacci level of the move off the October '08 bottom.  On the other hand, price is now into its second week trading below the trendline from the October '08 bottom.  A weekly close below 1075 would put a bearish tilt on this market.




For a more complete analysis including coverage of stock sectors, the precious metals, crude oil, forex and technical indicators watch the most recent BullBear Weekend Report:


Good luck and good trading!

Generally these reports as well as twice weekly video reports are prepared for BullBear Trading Service members and then released to the general public on a time delayed basis.  To get immediate access just become a member.  It's easy and currently free of charge.

Disclosure: No current positions.

By Steve Vincent

http://www.thebullbear.com

The BullBear is the social network for market traders and investors.  Here you will find a wide range of tools to discuss, debate, blog, post, chat and otherwise communicate with others who share your interest in the markets.

© 2010 Copyright Steven Vincent - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules