Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Time to Put on the Stock Market Bear Suits?

Stock-Markets / Stock Markets 2013 Jan 20, 2013 - 03:32 PM GMT

By: WavePatternTraders

Stock-Markets In previous reports I have spoke at length about expectations for the US markets to push higher above their respective September 2012 highs.

I have been looking for the DOW and SPX to push higher as we had seen many other European and US markets take out those September 2012 highs, so I felt it was only a matter of time before we saw others play catch up.


Between the last time I wrote and this report we have seen the bears fold and the bearish wave count crumble as I expected it to, but when you count an obvious 3 wave decline as a 5 wave decline you are always going to run into trouble. The sad truth is the “experts of Elliott Wave” do this sort of thing very often and it gives other Elliotticians a bad name so much that other Elliotticians such as me get tarnished under the same banner and it ruins what is still a great trading tool if it’s used in the right hands.

So an update to where I think we are and what I expect going forward. If you have read the last few updates, readers will know that I have remained bullish and called for prices to push higher, I have wanted and indeed expected to see the SPX and DOW exceed those September 2012 highs, with the SPX clearing that target that ticked off 1 of the remaining 2 markets I have been tracking and as of Fridays close the DOW was a 11 points off from the September highs.

So we might see a spike higher in the DOW from IBM results which are due on Tuesday.

SPX



We have now hit my target range, although it can still run a bit higher as I was looking for 1480-1500SPX, based on the DOW needing to see around 13660-13700 we could push a bit higher on Tuesday.

You will note we also have a timing cycle that is also due on the 23rd Jan, so a potential timing high could be setting up this week, although we do have the bulk of earnings out this coming week so things could get very interesting.

I am still working an ending diagonal and if this interpretation is correct then once its finished I suspect we are about to see a strong decline as the market is involved in a topping phase and with the last two markets virtually at their respect targets, it’s now time to be looking for a potential major top in the markets.

Having remained bullish for a number of weeks, I am slowing dusting off the furry bear suit and potentially ready to put it on should we see some strong evidence of a reversal.

With everyone and his/her dog calling for higher this is exactly the sort of sentiment I wanted to see, in fact I would be cautious about looking lower if I never say this sort of sentiment.

We saw it at the 2010 highs, 2011 highs and 2012 highs, so why would we expect any different?

I just got one question to ask? Where were these so called pundits called for 1600 and 1700 on the SPX when the SPX was trading at 1380-1400SPX. All I can recall was the market was going to 1250SPX, or so everyone kept telling me.

Everyone is an expert calling for higher when a market has just made new highs, yet you can count on one hand the number of trader’s looking for a large move to the downside from here.

As it stands I put myself in the bearish camp at these levels, when so many are now on one side of the boat that’s the exact sort of conditions I thrive on and start looking at taking the opposite side to the majority.

I did the same at the 2010, 2011 and 2012 peaks, and it worked out well, I see the same ideas and conditions as I did back then, in fact the conditions I see now are conditions that are reminiscent of a top of a trend. Traders look higher at the highs and lower at the lows, but when I see patterns and potential setups for a reversal, that’s when I look to fade the crowd at the top of trend and at the bottom of a trend.

Many appear to forget that I have been looking for these targets so it’s no surprise that we have arrived, so to suddenly get bearish at the top of suspect trend is what many traders and investors are unable to do.

DOW



I am working the same ideas, as you expect on the DOW, but it’s lacked the extra needed push into the target zone, a little bit higher would give it a better look, so a bit higher next week would be fitting to end this idea after the majority of earnings are out.

The great thing about both the ideas on the SPX and DOW is we have clear guidelines and risk parameters where the ideas are wrong, so we can either start laying into shorts from current levels or a bit higher with risk controlled, or we can simply wait and watch to see if we see some evidence to suggest the market has topped the rally from the March 2009 low.

Either way it won’t take much to find out if we are right or wrong, I will discuss that in more detail with members. So whilst we appear to have a great setup we can always wait for some evidence of a move lower and be safe or as safe as we can and limit risk, after all that’s the most important aspect of trading, to limit your risk as the gains will take care of themselves.

Bull Case

Now it wouldn’t be fair to post only one side of the argument without suggesting what the other side is looking at.

This is the only feasible bullish wave count I can realistically come up with that remains within the rules and has the “risk look”.



What you see here is something that I consider a low odds trade, as the ramifications of the next move higher in US stocks will be something that I don’t think many have took on board.

Forget 1600 or even 2000 on the SPX, try 2500SPX straight from here, as the next move is supposed to be a “3rd of 3rd” so a parabolic move to the upside, as the biggest and most strongest part of the move has yet to come.

So a near vertical move that will make the move in AAPL look like a $50 move, that’s how aggressive this wave count is.

I don’t believe you can label it any other way as I don’t see a strong 3rd wave yet and every bull cycle tends to see a strong 3rdwave, that’s how we can decide that it’s a strong impulse wave.

What we have been seeing the past 12 months is a series of waves that are overlapping, that’s the classic signature of an ending diagonal, not in my opinion of a market that is about to go parabolic to the upside.

I have to ask the question: If the market has needed 4 attempts (or is it 5?) of QE to get the market back to just underneath the prior all time highs, what is needed to take it far higher?

We are seeing each QE failing to push the market higher as the effects are weaker each time.

If we see stocks go parabolic and above 2000SPX, does anyone think that they will only go alone?

I strongly doubt that stocks will go it alone, many markets will join in, markets like Oil which probably is going to be at $150-200, Grains will likely go crazy on the upside and the US$ is likely to be crushed as hyper-inflation takes hold.

That is the scenario where I think you see a crazy spike higher in US stock as the bulls are suggesting.

Good luck on that trade, I think stocks will be the least of your worries as food riots will likely be seen as we saw the effects of what happens when markets go up in tandem, commodities join in as well.

So be careful what you wish for and the effects could be more damaging than you can imagine.

Bull or Bear we will know shortly, but as it stands I am happy to look for a reversal here and fade the crown, nothing is 100% but we have our risk parameters and we know where our ideas are wrong.

For $20 a month, come and joins us. With many of our stock ideas setting up I am sure there is a trade for everyone who trades US stocks.

Until next time

Have a profitable week ahead.

Click here to become a member
You can also follow us on twitter
What do we offer?

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.

If you looking for quality analysis from someone that actually looks at multiple charts and works hard at providing members information to stay on the right side of the trends and making $$$, why not give the site a trial.

If any of the readers want to see this article in a PDF format.

Please send an e-mail to Enquires@wavepatterntraders.com

Please put in the header PDF, or make it known that you want to be added to the mailing list for any future articles.

Or if you have any questions about becoming a member, please use the email address above.

If you like what you see, or want to see more of my work, then please sign up for the 4 week trial.

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.

Currently new members can sign up for a 4 week free trial to test drive the site, and see if my work can help in your trading and if it meets your requirements.

If you don't like what you see, then drop me an email within the 1st 4 weeks from when you join, and ask for a no questions refund.

You simply have nothing to lose.

By Jason Soni AKA Nouf

© 2013 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.


© 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