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The Power of the Wave Principle

Stock Market Bulls Back in Town?

Stock-Markets / Stock Markets 2013 Jan 01, 2013 - 10:59 AM GMT

By: WavePatternTraders

Stock-Markets Firstly I want to wish readers and members a happy New Year for 2013 and look forward to making more successful trades with members, even more than we did in 2012 as I think 2013 is going to start out with a bang, and if my long term ideas plan out the way they have so far, then we are going to be seeing some very large swings in both directions. What you saw this past week or so is nothing, I suspect we will be seeing moves like we saw in 2007-2008.


ES

The past 10 days we have seen crazy swings in both directions, from the flash crash that saw a 50 handle spike down, to Monday’s impressive near 40 handle rally.

Regular readers of my work will be aware that I have been looking for a move in the DOW and SPX to exceed their respective September 2012 highs. It’s because I have missing pieces of the jigsaw puzzle that I refuse to give up and pin the market having a top in place as some bears have done.

Aside from the fact the decline from the September high into the November low is a 3 wave decline, but I covered that issue in my last article so I won’t cover that again in this article.

Now as I pointed out in my last article some markets have made new highs above their September 2012highs, such as the XLF, NYSE, DAX & Value line index etc. But seeing major markets such as the SPX fail to exceed those September highs, has kept me looking for a move in the SPX above 1474.

The past week or so, we have seen a decent pullback and I started to notice a lot of bearish sentiment circulating on social websites such as Twitter and Elliott Wave blogs showing very bearish wave counts and in my opinion forcing a corrective structure into an impulsive looking structure, I suspect it’s to fit the bias of most traders, especially the bears that visit these Elliott Wave blogs.

Yet the skilled Elliottician that stuck to the principles of  Elliott Wave could clearly see that the decline was corrective, nowhere was there a 5 wave decline, well none that I could count, the result as you saw on Monday was a squeeze which I am positive took most bears by surprise.

With the hard sell off on Friday I am sure it had traders thinking about 1987 style crashes if a deal from Congress was not done before the 31st Dec deadline. Now I never knew as much as anyone else, so it would be silly of me to suggest I knew where the market was going to open, I made It known to members before that I wanted to see what happened after the open on Sunday before we could really get an idea what was going on.

A few hours after Sundays open, with the market not crashing as some had hoped, the market set itself up a bullish move, which if it could hold support around 1380ES could see a move back to 1480-90ES.

Of course not many would be thinking about a rally under the circumstances we saw on Monday, but I was looking for such a move, simply because I could not label the decline from the December highs as a 5 wave decline, no matter how hard a tried, I simply could not find one, although I have seen some amazing examples these past few days on some Elliott Wave blogs, truly amazing examples.

Well the move I wanted to see was a great example of too many on one side of the boat all betting for a crash and having to cover short positions quickly, the speed and strength was impressive, but we at WPT were fully aware of such a trap, should the market hold the 1380ES area, as well as having a wave count that explained why you saw such an explosive rally.

The decline was a corrective structure and once finished suggested a move to the upside. Although whilst it remained under 1396ES the market remained weak, but this had the ability to see a strong break higher and wrong foot many bears that were looking for crashes. The media has got many traders all bearish, yet the market held its ground, once it started to push above 1396ES that was the 1st warning that the bears were going to be in some trouble.

From there it was a freight train running over anyone that dared to stand in its way.

I guess a few senators respected Elliott Wave huh!! (Joke)

No matter what the outcome of the fiscal cliff I was only interested in what price did above 1380ES, with a setup that was expecting a strong move higher and target 1480-1490ES if it could hold 1380ES, the setup was there and waiting to explode, the result was what I wanted to see and further supports the idea we are working on the daily picture.

So where do we go from here? As I mentioned earlier in the article I will continue to look higher in this market whilst price gives me every reason to consider higher prices, no matter how bearish the sentiment or even the state of the economy, the only thing that interests me is what price does.

If wave X of wave [5] is in place we should slowly move higher over the coming weeks, as this climbs towards my target area around 1480-1500ES. Only something equally impressive on the downside would negate my forecasts of higher prices, but we have some areas below, that should we lose support, then we know we are wrong and we will look to switch to other ideas if price dictates that we need to discard our primary ideas.

But Monday was a great start and whilst my ideas are working, I see no reason to jump into the bear suits just yet, with no evidence of a top in this market, we will continue to look higher and enjoy the benefits of getting long and fading the crowd when so many don’t believe the market will or can push higher.

As traders we trade price and patterns, we don’t go looking for reasons why a market goes where it goes.

The daily idea as shown suggests a move higher into our target zones, and we also have a Fibonacci timing late in January or early February 2013, so onwards and upwards until such a time the market negates our ideas, or we see our targets hit. Hopefully by then most of the bears will have given up selling this market and the media will be mega bullish at the top into our target cluster, then I will likely be looking for a major top and looking to fade the crowd and majority of traders. But for now I don’t have a completed pattern, nor do I have any evidence of a breakdown, so I need to continue to remain bullish as long as this market remains bullish.

Price is all that matters to me. It’s the only thing that controls the condition of your broker accounts.

If you are sick and tired of getting whipsawed in this market or you have had enough of following poor wave counting from other sources or subscription services, then sign up and take advantage of the 4 week free trial.

If you are interested in learning how to count and use Elliott Wave the correct way and learn while you trade, then you have come to the right place. At wavepatterntraders you will join a small group of traders whose desire it is to learn how to count waves successfully and trade the right way, using Elliott Wave to its advantages not to its weakness.

The US markets are just a small selection of the market that we follow, we trade and follow many other markets and had some great ideas these past 2 weeks, with such a wide selection there is always an idea to trade somewhere, not matter if you trade stocks, forex metals or even commodities I am confident we have something for you.

Remember Elliott Wave used correctly is a profitable tool; you just got to know who to use it correctly

Until next time

Have a profitable week ahead.

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Short and long term analysis on US and European markets, various major FX pairs, commodities from Gold and silver to markets like natural gas.

Daily analysis on where I think the market is going with key support and resistance areas, we move and adjust as the market adjusts.

A chat room where members can discuss ideas with me or other members.

Members get to know who is moving the markets in the S&P pits*

*I have permission to post comments from the audio I hear from the S&P pits.

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This article is just a small portion of the markets I follow.

I cover many markets, from FX to US equities, right the way through to commodities.

If I have the data I am more than willing to offer requests to members.

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You simply have nothing to lose.

By Jason Soni AKA Nouf

© 2012 Copyright Jason Soni AKA Nouf - 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.

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