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
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Correction or Continuation? Market Will Answer Very Soon

Stock-Markets / Stock Markets 2010 Mar 30, 2010 - 11:28 AM GMT

By: Steven_Vincent

Stock-Markets Best Financial Markets Analysis ArticleBullBear traders have been long US equities (with the exception of a brief 2 day interlude) since the February 5th bottom.  We took half of our profits in anticipation of a minor wave 4 correction but we continue to hold 50% of our long positions with an eye towards a mid-late April wave 5 of 5 top to the major Wave 1.




The SPX has fulfilled its February reverse head and shoulders bottom target and should have commenced a wave 4 correction.  The type of correction seems to be in doubt and there remains the possibility that wave 3 has not yet completed and will extend to a double top at 1180 or even to whole number resistance in the 1200-1205 area.



The above 3 wave zig zag correction would be the most convenient and expeditious for the completion of the wave 4 correction--but since when did the market ever make things easy for traders?  Here's a closer look at two views of possible corrective wave structures: a zigzag and a flat.





We should have a clearer picture after Tuesday's action.  The 1174 area is key.  A move that closes an hourly bar above 1174 is likley to produce the flat, double top correction and a weak open and selloff will likely manifest the zigzag pattern.  It is also possible that wave 3 will extend to the next level of resisitance in the 1200-1204 area, however, breadth and sentiment indicators are (or at least were as of the weekend) sufficiently overbought to warrant the wave 4 corrective action.  In any case, BullBear traders have been warned to not short this action since it is too choppy, shallow and brief to trade successfully (except as a daytrade).  We want to be in the best possible position to buy back our shares for the final wave 5 of 5 advance to 1228-1244.  That should mean 100 points of profit on the SPX from a 1144 bottom.  The 1228 is exactly the 61.8 Fibonacci retracement level of the bear move from the all time high in 2007 as well as the 23.6 Fibonacci retracement level of the bull market from the 1982 bottom.  There is also horizontal price congestion from 1999, 2001, 2005, 2006 and 2008 at that level.  The 1244 level is the target given by the reverse head and shoulders bottom  that began formation in November of 2008.  By that time and price full bear capitulation will have taken place and breadth and sentiment indicators should be quite overbought on all time frames, setting up the most significant decline in time and price yet seen since the bottom in March of 2009.  Based on the wave structure and available supporting evidence at this time, such a decline will likely be a corrective A-B-C Wave 2 rather than a resumption of the prior bear trend.

In the last BullBear Weekend Report, I called for a big upside breakout in USD.JPY.  We sure got one.  This is the beginning of a major trend change after a multi-decade bottoming process.  Yen weakness may also signal that the Yen carry trade is back on and another liquidity pipeline may be back in service.  This can only further fuel the newly emerging asset price bubble.



The Weekly chart shows that major long term trendline resistance and the 50 week EMA are close to being taken out.  These are major technical events.



After a major bottoming pattern failure and a failed breakout of the major downtrend, the Euro has rallied straight up to technical resisitance.  That the rally has not been immediately rejected may be bullish.  On the other hand, the pattern failure is a major technical event and its bearish implications will not be easily overcome.



BullBear traders were warned of an impending breakout in crude oil as well, though I was not quite sure of the direction of the breakout.  Today the market asserted itself to the upside and the move, unlike many preceding it, held.  The 20 and 50 EMA's are now rising together in bullish alignment.  Let's look for a long entry on any retracement to the $81.70 area.  Stop loss is a close below the 50 EMA.  A weekly close below $81.70 would raise a caution flag on this market a set up a possible short sale opportunity.



Gold carving out another reverse head and shoulders bottoming process.  I suspect that we will see further weakness to the 1098 area where gold would then put in the peak of the right shoulder and become a strong buy.  That's also the 23.6% Fibonacci level of the move off the October '08 bottom.  On the other hand, price is now into its second week trading below the trendline from the October '08 bottom.  A weekly close below 1075 would put a bearish tilt on this market.




For a more complete analysis including coverage of stock sectors, the precious metals, crude oil, forex and technical indicators watch the most recent BullBear Weekend Report:


Good luck and good trading!

Generally these reports as well as twice weekly video reports are prepared for BullBear Trading Service members and then released to the general public on a time delayed basis.  To get immediate access just become a member.  It's easy and currently free of charge.

Disclosure: No current positions.

By Steve Vincent

http://www.thebullbear.com

The BullBear is the social network for market traders and investors.  Here you will find a wide range of tools to discuss, debate, blog, post, chat and otherwise communicate with others who share your interest in the markets.

© 2010 Copyright Steven Vincent - 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