Best of the Week
Most Popular
1. Gold Final Warning: Here Are the Stunning Implications of Plunging Gold Price - P_Radomski_CFA
2.Fed Balance Sheet QE4EVER - Stock Market Trend Forecast Analysis - Nadeem_Walayat
3.UK House Prices, Immigration, and Population Growth Mega Trend Forecast - Part1 - Nadeem_Walayat
4.Gold and Silver Precious Metals Pot Pourri - Rambus_Chartology
5.The Exponential Stocks Bull Market - Nadeem_Walayat
6.Yield Curve Inversion and the Stock Market 2019 - Nadeem_Walayat
7.America's 30 Blocks of Holes - James_Quinn
8.US Presidential Cycle and Stock Market Trend 2019 - Nadeem_Walayat
9.Dear Stocks Bull Market: Happy 10 Year Anniversary! - Troy_Bombardia
10.Britain's Demographic Time Bomb Has Gone Off! - Nadeem_Walayat
Last 7 days
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19
Crude Oil Price Fails At Critical Fibonacci Level - 15th May 19
Strong Stock Market Rally Expected - 15th May 19
US China Trade Impasse Threatens US Lithium, Rare Earth Imports - 15th May 19
Gold Mind Reader's Guide to the Global Markets Galaxy: 'Surreal' - 15th May 19
Trade Wars and Other Black Swan Threats to Your Investments - 15th May 19
Our Long-Anticipated Gold Momentum Rally Begins - 15th May 19
Defense Spending Is Recession Proof - Defense Dividend Stocks - 15th May 19
US China Trade Issues Will Drive Market Trends – PART II - 14th May 19
The Exter Inverted Pyramid of Global Liquidity Credit risk, Liquidity and Gold - 14th May 19
Can You Afford To Ignore These Two Flawless Gold Slide Indicators? - 14th May 19
As cryptocurrency wallets become more popular, will cryptocurrencies replace traditional payments? - 14th May 19
How US Debt Will Reach $40 Trillion by 2025 - 14th May 19
Dangers Beyond a Trade War with China - 14th May 19
eBook - Greatest Tool for Trading? - 14th May 19
Classic Pitfalls for Inexperienced Traders - 14th May 19
Stock Market S&P 500 Negative Expectations Again - 13th May 19
Why Rising Living Standard in China Offers Global Hope - 13th May 19
Stock Market Anticipated Correction Starts On Cue! - 13th May 19
How Chinese Trade Issues Will Drive Stock Market Trends - 13th May 19
Amazon SCAM Deliveries for Fake Verified Purchaser Reviews "Brushing" - 13th May 19
Stock Market US China Trade War Panic - Video - 13th May 19
US Stock Market Leading Macro Economic Indicators Update - 12th May 19
SAMSUNG - BC94.L - Investing in AI Machine Intelligence Stocks - 11th May 19
US Increases Trade Tariffs Against China – Stock Markets, Gold, and Silver - 11th May 19
Who Has More To Lose In A No Deal Brexit? - 11th May 19
Gold at $1,344 Will Start Real Fireworks on the Upside - 11th May 19
Make America’s Economy Great Again - 10th May 19
Big US Stocks’ 2019 Fundamentals - 10th May 19
Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - 10th May 19
Stock Market Shake-Out Continues – Where Is The Bottom? - 10th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Six Reasons To Buy Stocks In The Short-Term

Stock-Markets / Stock Markets 2010 Aug 23, 2010 - 12:01 PM GMT

By: David_Grandey


Best Financial Markets Analysis ArticleWhen looking at the charts, we see a potential bull count, specifically this wave 2 morphing into a bigger wave 2.

What is interesting are a few tidbits that make us think a little deeper about us possibly being still in wave 2.

1. The S&P 500 chart off the March 2009 lows through present shows that of a recent uptrend line being created off the July lows. That trendline was dang near touched Friday as shown below.

2. Options expiration. Last weekend we talked about how typically they move the market the opposite direction that most people think and how we had the feeling that the four down days prior to going into options expiration week may not have been enough bearishness to turn the tide vs. the uptrend off the July lows. Sure enough it wasn’t and the market to those who were still emotionally attached to the uptrend outcome got hammered.

3. Friday the OTC Comp (remember it and the Russell 2000 LEAD the market) hit the 61.8% fib level earlier in the week and FAILED TO BUST TO THE DOWNSIDE. Said another way — the 61.8% fib level held and we got a reaction off of it. Even a fair amount of the names in play on our follow the leaders list for the most part took it all in stride. A fair amount of the recent go go names also just treaded water when all was said and done.

Notice we still have a gap that could still yet be filled just over the 50 day average?

Also notice since late May the OTC Comp hasn’t really gone anywhere? Ahhh but a fair amount of individual stocks have and that’s where our focus is going to be on next week.

Bottom line on this chart are two things we want to really key in on.

The lows pretty much need to hold (light blue line). But even if it doesn’t don’t despair as there are the makings of a falling bullish wedge (See SPX chart below.

We need to break the pink line to the upside if we are going to stage an abc to the upside pattern as shown above.

4. The Hindenburg Omen apparently triggered late last week Remember what we said about whenever the blogosphere and everyone starts talking about something it’s about time to do the opposite? Well, we are there.

5. The charts also show the makings of a potential B wave pullback in a bigger wave 2 abc up. Not to mention a backtest of the bigger trend channel from the April highs through the July lows as shown in blue in the chart below.

6. September is already being touted as a bad month historically and seeing as how we are approaching it from an overold condition a headfake to the upside would not be out of line due to the bearishness out there. It wouldn’t surprise us in the least. In fact it would be the perfect set up.

Mess with the bears some more by staging a C wave up to retest the 1131 level perhaps? That is just enough to suck in the bulls then as what is normally true with bear market rallies, short cover rallies and the like. That being they would suck in the little guy, make him feel all excited, get him all emotional and then?


Please keep in mind that we’re not construeing we are going to follow that path (don’t get attached to this outcome). We’re just saying it’s a great set up that makes perfect sense and besides the last week or so was very difficult due to blink your eyes you missed it for both the bulls and bears alike as the big moves as usual lately took place in the form of a gap. After the gaps you really got no decent follow through in either direction unless you were already there and they were news events generally speaking.

It really has that look and feel of being more of a market of stocks than it is a stockmarket with more stocks trading to the beat of their own drum if you will. And that is where our focus is going to be next week – individual stocks.

The bearish side of the equation is that we are in wave 3

What bothers us about it is that of this supposed wave 3 is that it really hasn’t thus far lived up to its name (“The Wonder To Behold”) We mean where are the fireworks, where’s the shock and awe?

We can see the wave 1 down on the big picture chart and we see us being in the wave 2 rising wedge break and us now being in the supposed dreaded wave 3. We see that and we all do, but where is the decisivness. Where is the “with conviction” impulse move to the down side?

We’re not saying it’s not going to happen but it sure seems at this moment in time like a dud.

That all said we are going to use the short term SPX chart early next week to key our trades off of.

By David Grandey

To learn more, sign up for our free newsletter and receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."

David Grandey is the founder of All About Trends, an email newsletter service revealing stocks in ideal set-ups offering potential significant short-term gains. A successful canslim-based stock market investor for the past 10 years, he has worked for Meriwest Credit Union Silicon Valley Bank, helping to establish brand awareness and credibility through feature editorial coverage in leading national and local news media.

© 2010 Copyright  David Grandey- 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 - 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