More Upside Still Expected For Stocks SPX/SPY Before Aggressive Sell off
Stock-Markets / Stock Markets 2014 May 10, 2014 - 06:32 PM GMT
SPY
A new week, same outcome.
This seems to be same message every week, up down up down, if you are getting dizzy because of this price action you are not alone with those thoughts. I suspect the market is still currently in an ending diagonal for what I think is a 5th wave to complete a larger 5 wave advance from the Oct 2011 lows.
The whipsaw we have seen over the past few weeks is an inherent characteristic of the ending diagonal pattern, chop up as many bulls as bears before it finishes and then sets up a reversal. The key factor to the pattern is the shape, most will refer to the pattern as a bearish wedge, although in Elliott wave circles we call it an ending diagonal, but the message is still the same.
I have been short term bullish for a few weeks now, although it feels like I have been looking higher for months, the choppy upside is slowing the rate of ascent rapidly and causing most traders to either move to the sidelines or be forced to participate begrudging.
Wedges in general tend to be lethargic patterns and bore everyone to death right about the time most have given up to the idea of a reversal, this is where experience really matters, having the confidence to stay with the idea and ignore outside forces. I still feel that this pattern has a bit more upside to resolve first, so unless I see a strong reversal that breaks support, then I am continuing to look higher.
EURUSD
A good example of a potentially completed ending diagonal was witnessed on EURUSD this past week. The rapid reversal of that market argues that the idea is completed and a large decline is likely, that too bored traders to death for weeks, although we stuck to our guns and kept looking higher much to the dismay from the EURUSD bears until we got the new high above 13965, I am looking much lower on EURUSD, Initial targets are at 136 and 133.
If we do indeed have an ending diagonal setting up on the SPY/SPX then what we saw on EURUSD is what I would expect to see on the SPY/SPX once its completed then a strong reversal lower.
Bulls beware, the ending diagonal (bearish wedge) is a classic reversal pattern and one that should not be ignored, in my opinion ignore it at your peril, markets don't go up forever. Although you would think they do judging by the level of bullishness in the media.
If you are interested in following our ideas on EURUSD and SPX then we have a new package especially designed just for traders that trade only EURUSD, SPX and Gold. For $20 a month you can follow our analysis of 3 of the most popular markets.
Click here to find out more: http://www.wavepatterntraders.com/...
Conclusion
I am still looking for a bit more upside in the SPX/SPY to complete the wedge pattern, once completed we are likely to setup for a strong decline, a decline that should be in the order of what we saw in 2011.
The EURUSD has probably put in a major peak, so against last week’s highs at 13993 I am expecting more downside.
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
© 2014 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.
WavePatternTraders Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
