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
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stocks & Commodity Markets Elliott Wave Analysis - Show me the money!

Stock-Markets / Elliott Wave Theory Apr 01, 2007 - 05:06 PM GMT

By: Dominick

Stock-Markets

Surprise, surprise, another volatile week. The bears got their big selloff, but it was in corn, not in the S&P's! Corn opened down lock limit as the S&P's created great trading opportunities for the “unbiased” trader.

As we ended 2006, I promised 2007 would be the year of volatility, and hasn't that been the truth?! It feels like only yesterday we were grinding up each day point by point. Friday's closing bell wrapped up March, as well as the first quarter, but investors who were pegged to the S&P are in for a surprise when they receive their quarterly statements. The S&P closed 2 points from its 2006 close.


I'm sure many traders did better, but I'm also sure many are in the red this year. After all the juicy swings we've seen so far, that can only happen by being with the “in crowd” and following the wrong sentiment all over town. In January and February, bulls stayed too long and bears shorted too early. As we fell from the diagonal, Bulls bought back too early and bears stayed too late. Meanwhile, unbiased traders are making money on both ends.

But not only did the bears stay short too long when the market turned back up recently, they've been buying puts everyday as the S&P's retrace a full 75% off the lows. Traders have been playing this broken record for the last 4 years! Isn't this setup played out by now? Sure, this could be the real one, but why give back 75% when we have no confirmation yet?

Since March 14 th , where we saw our SPX 1360 area validated, it's been a challenge to educate our rapidly growing number of new members. Old members who've successfully made the transition from bear to trader are just fine. Many new members still seem to want to follow the crowd and are having a tough time because the streets are filled with “crash” counts. I can't really blame them as it's a hard sentiment to escape from. That said, they are also starting to recognize that going long from 1360's to 1440 also makes your portfolio grow rapidly. Don't get me wrong, I'll be on the bearish side as soon as I see the market grow some fur, but not before that.

A good case in point for the bear camp was the drop in February. Readers all knew that I had an S&P target 1462/1470 and was ready to short it, but not before confirmation. After getting short close to the top, I sensed that a low was being built in March, rather than a trapdoor for continuation of the drop. This week, we might have the same situation, but on a smaller degree. Has the market topped out in a second wave retracement on March 23 rd , or are we about to set a huge bear trap to finally get that run to new highs that sets up the classic capitulation?

As we've basically nailed these last two swings, we think we have the correct possible patterns and are waiting for a bit more price action to confirm. It might only take another day or two . I believe we have a decent move from here that starts the new trend, or ends the old. We are ready to take that trade which is probably within the next 20 points.

Let's talk a bit about last week. I had stated the following on last week's update:

“Next week we have some work to do in the short term patterns. We should've already seen a pullback, but the market still has a bid from trapped shorts. My short term trend charts have already weakened”

The market wasted no time in dropping a big 13 points in the first hour of the week. Expecting that drop, as a 4 th wave pattern, we were able to go long the bottom as it screamed to the upside, escaping another bear trap. From that high, the shorts were able to trap bulls into thinking that a triangle 4 th wave was forming and used Bernanke's speech to execute. I also had that same triangle and unfortunately missed the selloff into the speech but as “traders”, we then got back aboard that low which almost made it back up to another high.

And boy did we trade this week! 10-15 point swings are now almost a sure thing. With the aid of my Proprietary Fibonacci methods, we were able to zone into targets that were 1 tick away of highs and lows of a fast-moving market. One example was a low target of 1423 on Thursday (actual low was 1423.25) and resistance at 1440 on Friday (actual high was 1439.75). Friday morning's pre-market post had warned that 1440 was a key area and that stopping there could be a problem. The S&P futures seemed to know that. After a gap up, they reversed to sell off into a low of 1418. Those 2 swings alone totaled 38 points, and prove how much there is to take from a market that closed flat for the day, and the year!

As most traders sold into what looked to be the start of a 3 rd of a 3 rd of a 3 rd , this chart was posted right off the lows showing a simple test of prior break out. Price jumped off that low to close up 11 points away from it.

I hate to sound like I'm making fun of the bearish case as I'm looking forward to trading it as much as the next trader, but so far the bears are losing the fight once again. There still is another day or so to have their way but as one of our seasoned traders posted,

“After the alleged completed wave 2, prices should have declined sharply in clearly impulsive fashion.  THEY DID NOT.  There is no way that one can reasonably count the decline from the 12511.0 high of March 23 as either an initial "five" or even part of one.  For now, the drop from that high appears best counted as a corrective "triple three" to today's low.  As long as last week's high remains intact, however, I agree that this is the best shot the bears have.”

I agree 100% with that statement, and if the bears cant “show me the money” by early next week, we have better plans for the market.

Last week I included a chart that showed an analog that we had been following.

Below is the updated chart that has served us well since December. If we get confirmation of a certain pattern early next week, we may put this chart on the back burner and concentrate on a better idea. But in the meantime:

Another statement I made last week was:

I will simply caution that once we see the market validate our suspected patterns, we'll be preparing for more violent moves in the future. I will also be cautioning our day traders about going home with positions.

I want to reiterate that statement this week as we are far from calming down.

As you saw this week, both volatility and gaps are here to stay, so be careful. With that said, I'm not sure if we still need a retest or lower low of Fridays action before turning back up if the bearish case is dead. I would like to see that happen, but also willing to chase it up if I have confirmation. Doesn't matter anyway, this market is full of points for the “Unbiased” Elliott Wave” trader. In last weeks update I mentioned we had a possible important date around April 9 th . Keep that in mind along with the Island in the S&P that I had showed, in case the bears lose the fight here. If the bearish case has begun, you will know sooner than you think!

Grains

Earlier I mentioned the lock limit down in corn. We had been waiting for that for some time now as we had a nice setup.

 

Oil

Crude shot up to its highest levels since December this week. Remember when the talk was about oil in the $30's, except for me, who was telling you to expect mid $60's again? Well, here we are. No doubt some buyers were getting in this week on the news coming out of Iran . While this situation can honestly go either way from here, it'll probably be awhile before any new escalations, so there's a good chance oil settles back down a bit.

Members Only

Last week I mentioned:

“This week will give us a lot of information as we wait for the results of this small consolidation”

The S&P's wasted no time early last week to break down from that consolidation and we got our awaited volatility. I'm sure you all know what the charts have a potential of saying pretty soon, but to be perfectly “unbiased” I must give the bear a chance to “show me the money”.

Otherwise, use the link below to see 2 excellent possibilities as others scramble. Good luck next week and be careful. Being flat overnight isn't a bad idea until we have confirmation.

S&P 500 Chart

 

To Current and Prospective Members:

There will not be a Market Update for the week ending April 6, as I finally take a day off and celebrate the Easter holiday. 


TTC will also be increasing it monthly subscription fee sometime before this summer.  The increase has become inevitable due to our ongoing expansion of the Website, computer and software upgrades, and the addition of services such as trend cycle charts. Current members and anyone that joins before the increase takes effect will not be subject to the new price, and will continue paying the current $50 subscription fee on a month-to-month basis.  So if you have been thinking of joining, this might be a great time.

Thank you for your attention to these changes.  If there are any questions, please direct your email to admin@tradingthecharts.com.

Have a profitable, and safe week trading, and remember:

 

“Unbiased Elliott Wave works!”

By Dominick

For real-time analysis, become a member for only $50

If you've enjoyed this article, signup for Market Updates , our monthly newsletter, and, for more immediate analysis and market reaction, view my work and the charts exchanged between our seasoned traders in TradingtheCharts forum . Continued success has inspired expansion of the “open access to non subscribers” forums, and our Market Advisory members and I have agreed to post our work in these forums periodically. Explore services from Wall Street's best, including Jim Curry, Tim Ords, Glen Neely, Richard Rhodes, Andre Gratian, Bob Carver, Eric Hadik, Chartsedge, Elliott today, Stock Barometer, Harry Boxer, Mike Paulenoff and others. Try them all, subscribe to the ones that suit your style, and accelerate your trading profits! These forums are on the top of the homepage at Trading the Charts. Market analysts are always welcome to contribute to the Forum or newsletter. Email me @ Dominick@tradingthecharts.com if you have any interest.

This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual. Check with your licensed financial advisor or broker prior to taking any action.


© 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