Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market Setting Up For the Next Decline

Stock-Markets / Stock Markets 2011 Aug 14, 2011 - 06:22 AM GMT

By: WavePatternTraders

Stock-Markets

Best Financial Markets Analysis ArticleLast week I left readers with this idea (see graph). Well fast forward and it seems we are setting up for the next move lower in what I suspect is a 5th wave towards lower prices.


This week saw some crazy swings on 5% of more on the market each day, those sorts of swings are creating some great trading conditions and the traders that are switched on and understanding price action are taking full advantage of the moves.

One issue is account size vs trade size, in these sort of conditions, traders need to adjust stops and size of the trade, for the size of the moves we are seeing as if you get on the wrong end of some of these moves, they can be devastating to your account. That being said, these conditions are where you can really make some great trades due to the swings we are seeing on a daily basis.

Currently I suspect we have been working a 4th wave, from the FOMC spike, and from there appears to be a 3 wave move which has finally reached our upper targets.

We went into this went this week looking for the end of wave [iii] and then trying to find a buying opportunity for wave [iv], although some of the swings we saw made conditions a little nerve racking, t we had a plan, as towards the end of week I suspected a trap as a "[b]" wave setting up.

I showed members this chart, and we were aware that the market could really let loose and burn the shorts that sold the lows. I had a felling the market was not finished with the bears that got in too late to sell the market and I felt the market was trying to set up higher before a resumption of the downtrend.

As you can see the flat became the working idea, although as the move pushed higher we were watching both ideas as one by one our upper target levels around 1163ES then 1175ES was hit, and eventually above 1183ES.

By the end of Thursday there was a potential to start a move lower, however some firm buying was seen from one of lower areas at 1147ES which then proceeded to push higher and create a small gap up, which anyone that has traded the past few months knows that Fridays have become a very slow day recently. So it was back to buying dips above 1167ES, and that holds true going into Sundays open, as I still feel above 1167ES then the market wants to test the 1200ES area.

A closer look at the gyrations suggests that we could see a pop on Monday and a reversal, but a chance for aggressive ES traders to buy above 1167ES and look to trade throughout the globex session and potentially see a gap up on the SPX cash market.

We do have a trigger point should see weakness in globex and in the European session, but until that is triggered I think we have a bit of upside left for this current ideas of a 4th wave rally.


SPY
Looking at volume analysis of the SPY volume, it tends to suggest we have a weaker trend in what I suspect is a countertrend bounce against the heavy decline we have seen over the past few weeks.

It's now reached our target and appears to be a 3 wave advance which is corrective and aligns with our ideas of the bounce we have seen being a correction and what Elliotticians refer to a 4th wave.

If you look carefully the volume is declining and it's a normal characteristics of a counter trend move in a wave C of a ABC advance, generally you will see a strong wave A, and the wave C will be weaker, that suggests the move is a correction against the trend, in this case this current move fits in with the profile of a correction.

Unless Monday opens up with a very aggressive upside day, then we appear to be setting up for the next move lower and targets are towards the 1080SPX as there was a ES printed 1077ES in the globex session.


NDX
What was once support now becomes resistance, the NDX is back testing its previous broken support area.


Nyse McClellan Oscillator
With the McClellan Oscillator now re-set from over sold conditions it too is potentially setting up a reversal, as the 0 line will be resistance.

EUR/USD
This pair looks like it is about to setup for an explosive move, only we have 2 working ideas, and until this pair makes its move there is simply no telling which direction its wants to break, but it should be a great move regardless.

Bullish

Bearish

I suspect over the coming days, likely this week that the market will break one set of support or resistance areas and confirm its intentions, then it's a case of jumping on board for the ride as it could be a great trade.

TYX VS SPX
A chart I like to use for timing of trend reversals is that of the TYX, what tends to happen is near reversals, traders tend to move in/out of stocks and bonds, and TYX tends to move a few days before equities reverse, and right now we potentially have such an occasion as traders were buying bonds as stocks were floating and grind higher, which again suggests that some traders trying to get out of stocks and run back into the safety of bond as yields pushed lower on Friday.


Conclusion
Looking at the European and US markets, I suspect the market is setting up for a new move lower, unless it surprises traders early new week, we could see a little bit higher and fill some gaps around the 1200SPX area, before I suspect sellers hit the tape again.

Targets are towards 1080SPX in what could be a better buying opportunity to last a month or so.

We have some key areas on the upside, should the market surprise us and put in an aggressive upside move early next week, then we will have to adjust our bias, currently I expect lower in a 5th wave, but will respect an aggressive move, should buyers decide to go on an aggressive buying spree.

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

© 2011 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

6 Critical Money Making Rules