Monday, 30 July 2012

Are you sure the rally will continue?

Better than expected GDP announcement on Friday gave the market something to be happy about. S&P rallied to new two month highs reassuring bulls that the uptrend is back on track and the worst is behind. Eurozone fears were wiped away by the announced alertness  of ECB officials. Intervention will be certain in order for EURO to survive and prosper. 

Technically speaking the market continued its bounce that we were expecting and continues to trade inside our sideways trading range. Now that the market trades around the upper boundaries where strong resistance is found, traders should take their profits if not take a bet for another decline. From the elliott wave perspective, the market from June lows has not done any impulsive move that would counter the April-May 5 wave decline. The only bullish pattern that might explain this overlapping upward move from June lows, is the existence of multiple one-twos. This is my alternative wave count. 1325 cash would certainly be the stop for any long position in my opinion. Bears definite stop is 1422. However a move above 1400 will be an early sign that bulls are winning the upper hand and that new hghs lie ahead. Bears will regain strength after the break of 1353 and 1325.

Friday, 27 July 2012

Will AAPL fall from the tree?

Apple’s sales for the third quarter missed estimates due to weakness in European economy and a pause in iPhone sales ahead of the release of a new version. Following the dissapointing third-quarter financial results, AAPL has dropped to 570$ after the announcement.As depicted in the chart, AAPL is right on its longer term support. The rise from 522,18$ to 620$ does not look impulsive. This move could very well be an X wave. This corrective pattern will end with another downward movement towards 500-450$. The first sign would be the break of the support lines (gann fan and pitchfork). This could coincide with our bearish views on S&P as posted in my blog. Concluding our view is that 567-570$ level should hold if AAPL is to move higher both in short and intermediate term. This price level can also be a reverse point for ones' position as it can accelerate pressures towards 550-520$.

Thank you for taking the time to read my thoughts.

Thursday, 26 July 2012

EURUSD could make a bigger bounce

Despite the pessimistic sentiment around europe and the fears regarding the debt crisis, EURUSD could have found a short term support around 1,2050. In the daily chart EURUSD is trending according to our expectations and has touched the middle pitchfork support. This could justify a big bounce towards 1,25. Using elliott waves we could say that we are at the final stages of the decline from February highs. However the move is not over yet despite the expected upward correction. Another new low below 1,20 is still a very possible scenario as a final 5th wave.

Taking a closer look at the intraday chart we confirm that 1,2150 has been a resistance as stated yesterday in my twitter updates. Staying above 1,2120 the market could be making a pause with this sideways movement. A break above 1,2150 and staying above that level would be my first sign that a large upward correction might have already started.  The move from the lows is in 3 waves and if wave 4 and 5 are not completed then this move would certainly be an upward correction and the downtrend will resume soon. 

Thank you for taking the time to read my post.

GOLD is topping or breaking out of the triangle?

Gold rallied yesterday approximately 20$. However nothing has changed raltively to our longer term trading strategy. Gold still remains inside the tight trading range and within the triangle limits as depicted on the chart. This could prove a good opportunity to sell as prices are close to the 1630-40$ resistance. We could witness another rejection at these levels and another downward move towards the lower support limit of the triangle that stands at 1550$. If however gold breaks out above 1630-40$, then a large move towards 1750$ could be expected.

My preferred strategy is to sell near resistance and place a stop reverse order if a break out occurs. Otherwise we could witness a large decline towards 1300 if 1550$ and 1525$ are broken.

Thank you for taking the time to read my thoughts on Gold.

Wednesday, 25 July 2012

DJIA elliott wave analysis

DJIA has made a triple bottom/top formation in the daily chart.If we want to be strict with our wave count, we cannot see any sign of impulsive upward waves from June lows. On the other hand the decline from April-May is looking impulsive. So taking under consideration only the daily chart a trader should have in mind the 12500 level as support and the 13000 level as resistance.

In the 60m chart DJIA has slightly broken below the trading range but bounced right back up. The decline looks impulsive but it needs to close below 12500 in order to confirm the downtrend. Concluding DJIA is still trading inside the trading range having held above support levels. This may be a good sign for bulls, but if the bounce is in 3 waves I would bet on another sharp decline below 12500.

Taking a closer look at the decline, we can label it as a 5 wave impulsive move. Thus bears could have the upper hand again. If this count is correct, then a 3 wave bounce is to follow towards 12750-12800. At those levels I would think of selling this index once again, with a stop reverse at recent highs and a bit higher.

Thank you for taking the time to read my thoughts.

Tuesday, 24 July 2012

US indices moving sideways above support levels

The more time passes the more the move from June lows looks corrective to me. I don't think that the market is gathering power for a move higher, but rather is still correcting the downward move of April-May. Both S&P and DJIA as depicted in the charts found support at the upward sloping trendline that connects recent bottoms. As long as the market remains inside the trading range created in June, we are going nowhere. As I said at the beginning, the market from June lows has an overlapping pattern that decreases any bullish chances for an impulsive move upwards. The most possible outcome for me would be to see the market break down around early August towards lower lows than June 1st.

S&P support is found at 1337-1325-1310. If support is broken then target would be towards 1200-1150

DJIA support levels are 12500-12450-12380. If broken then the market could move towards 12000 and lower.

Thank you for taking the time to read my posts.

Monday, 23 July 2012

European indices start the week with alarming signs

It's been a turbulent start of the week for european indices. DAX for starters is breaking the supportive upward trendline and has most probably finished wave II. DAX has topped near 61,8% retracement and in a 3 wave pattern as depicted in the chart. A new impulsive move downwards is expected in DAX in the comming weeks.

The situation is similar in the Spanish IBEX and the Italian MIB. Both indices have made upward overlapping moves. This pattern is the main characteristic of a correction and now that the downtrend resumes, I'm afraid things are going to get very ugly unless there is some constructive political intervention. 

Spain is following the 'Greek successful' recipe of budget cutting and speeding the growth slowdown. Italy is next. Techically speaking both indices are breaking short term supports while IBEX makes new lows relative to June 1st low. MIB after back testing the broken support line is also making lower lows relative to June 1st. 

Markets have  the potential to move a lot lower and their charts remind me where Greek stocks were 2 years ago. Of course Germany and France won't remain unaffected by this situation and are prone to big declines also. The domino will certainly have effects across the atlantic and what remains to be seen is how and if officials are going to react and take necessary measures. Our wave counts on US and European markets are going according to our roadmap.

Friday, 20 July 2012

Only FED intervention will help the market avoid the upcoming large decline

 As long as S&P is rising in a corrective pattern (overlapping waves) and as long as it remains below 1422, I expect June lows to be broken. I see the top being formed until August 1st. After that I expect a large decline towards 1250 at first and then maybe 1150. Confirmation of this view would be the break of 1345 and 1310 support levels. Taking consideration of the time variable, the decline from 1422 until June lows, will have the same length with the rise from June 4th to August 1st (FOMC Rate Decision). 

I think FED intervention (QE3?) is more possible to come after the decline in the index. In the weekly chart S&P is crawling on top of the lower pitchfork support. Bernanke will announce QE3 but I believe he is trying to delay it as much as he can. If the consequences of such measures will prove that it does more harm than good is another riddle that economists battle around it.

From the elliott wave perspective I like to keep things simple. Is the rise from June 4th impulsive? No. Is it corrective? Most probably yes. When this correction ends, another wave down at least as big as the April-May decline will follow.

Thursday, 19 July 2012

Overlapping waves in S&P and EURUSD, means correction!

 S&P is rising in an overlapping pattern. Higher highs and higher lows have pushed the index higher than the 61,8% retracement of the entire decline from 1422. According to elliott wave rules, wave 2 should not overlap wave 1 by more than 100%. There is a slim chance that this overlapping upward wave move is part of a bigger impulsive move and the market makes small 1-2 waves. As I said this scenario has less chances relative to the scenario that we are in an upward correction. I believe it is more possible we are in an upward correction that will not break 1422 and that June lows will be tested if not broken. Bulls will continue to feel comfortable as long as the last low is not broken ( 1325). Support levels also include 1345-1325-1310 cash price).

A similar overlapping pattern is seen in EURUSD. As noted in a previous post, the pair managed to move above the middle pitchfork resistance. It backtested the pitchfork level that was broken and now tries to recapture 1,23. This upward move is most probably a correction and the downtrend will resume towards 1,20. Support lies at 1,2210 and 1,2160. This upward correction could reach 1,24 as mentioned in previous posts as long as support levels hold.

Thank you for taking the time to read my wave analysis.

Wednesday, 18 July 2012

Is S&P topping or gathering power to move higher?

 Last session was a very interesting one. Although the market turned down and every one expected that the top was in, buyers were strong enough to push prices to new intraday highs. A bullish wave count as depicted in the 10m chart has a 5 wave move completed from 1325 lows. There is however an important drawback in this count. Wave ii is far too small both in time and price relative to the same degree wave iv.

So here comes the bearish count that I favor for the time being. 5 waves down completed and followed by a 3 wave correction. First confirmation that this count is correct will be the breaking of 1345. Next support that should break is the blue trend line and the 1325 level. As mentioned many times in previous posts 1310 is very important support level. Bears know that 1375 is the closest stop price level they can use or if they want to be patient, they can wait until a support level is broken. The textbook stop for bears would only be 1422. Bulls on the other hand could use 1310 as a stop in my opinion. The overlapping rise since early June doesn't work in their favor.

Tuesday, 17 July 2012

When the wave counts start to get confusing.....

When the wave counts start to get confusing, when there is no clear impulsive move upwards or downwards, when important support or resistance levels are not broken, when the market moves sideways and in a tightening range, I step back and try to reset my views and start looking things from a wider point of view. Today I have chosen those two weekly charts on S&P, since the last sessions have not given me the food for thought I was expecting.Waves need time to unfold and most of the time our nature is so anxious to see the waves unfold that we lose track of the bigger picture.

The bigger picture is what I 'm trying today to analyse and create a roadmap for the following weeks as I think August will be a volatile month. The recent decline in S&P from March highs is considered by most ellioticians as impulsive. The 5 wave decline is very clear as a textbook example. I like it when things are that clear and simple. The basic argument amongst wave analysts is whether this is part of a correction or the start of a larger impulsive move down similar and even bigger to the 2008 decline. Each scenario has its strengths and weakensses. I do not favor the doomsday scenario that many believe in, where S&P could decline towards 100 level, but also I'm very sceptical on the way the rise from 2009 is unfolding. Back to our first chart, it is important for any bullish scenario for the index to hold above 1123. My first level of alert would be a close below 1340 and the break of 1310. A move below 1278 will probably accelerate the decline as it did in 2008. 

I could justify a correction towards 1150 but the overlapping nature of the wave structure from 2010 until today, is worrying for any bull. Bulls will feel confident as long as the market continues to make new higher highs and higher lows. Pitchfork support as depicted in the above chart will try and support the index at 1310. Bears on the other hand have let the index retrace just above 61,8% of the 5 wave decline and their aim is to break 1310 important support. Any move above 1375 will increase the chances that 1422 will eventually be broken.

Concluding, the market is either making another top around these levels or is gathering power, by moving sideways, in order to make new highs in August. 1310 and 1375 are important levels that if broken will give more chances to either the bearish or bullish scenario.

Thank you for taking the time to read my thoughts.

Monday, 16 July 2012

GBPUSD analysis

 GBPUSD longer term daily chart depicts a lasting sideways movement that according to our view is soon going to end. This sideways huge triange that is in play from 2009 has two important direction levels. 1,6250 is long term resistance and the upper part of the triangle formation. Whereas 1,50 is the longer term support and the lower part of the triangle. Trading range is getting narrow and whichever side breaks, a large move will follow.

Taking a closer look we observe that in the 4hour chart the pair is moving in a downward channel. Resistance is very close at 1,56. If the pattern continues, then next target will be below 1,54. The wave structure is corrective due to the overlapping waves, so an upward move could anytime be initiated. Bears should have tight stops at the upper channel boundaries.

EURUSD continues downtrend

Nothing much has changed since our last update on EURUSD. Trend remains down and the pair as seen in our 4hour chart remains supressed under the middle pitchfork resistance. The pair has tried to bounce back up, but it was rejected at the pitchfork resistance just below 1,23. A break above 1,2250 could push the pair higher towards 1,24. If the pair continues to stay below the pitchfork resistance, it could give a final push to a new low towards 1,20 where the psychological support lies.  A break below 1,2160 will confirm that 1,2250 is the stop level for bears.

Friday, 13 July 2012

S&P to test June lows

 Recent weeks have seen S&P trade within the 1300-1380 range. QE3 is something that could help the markets push towards higher levels and maybe new highs, but how sustainable this rise will be I don't know and I don't feel very comfortable with. My view is that QE3 will become a reality but the more the FED can delay it, the more they will take advantage of the time they have. Elections will surely play a major part in taking such a decision and as to where the market is heading. Back into technicals, my weekly chart prepares me for the worst to come. The 5 waves down from march are a sign of an impeding bigger decline. Adding to that, the similarities in the weekly chart and previous large declines, makes me expect a test of the June lows is soon to come. This decline could push prices further down towards 1200. This could be the trigger for QE3 but that is just a thought.
Taking a closer look in the 60m chart of S&P, I have 2 highly possible wave counts under consideration. The first count is depicted with red letters and assumes that 5 waves down have completed from the high at the 1375 area. A 3 wave upward pull back towards 1340-50 is expected to top and end lesser degree wave 2. Invalidation of this count would be the break above 1375 price level.

Another wave count depicted in the chart is with yellow letters and is more bearish than the first. The 3rd wave is on its way and a couple of 1-2 waves have been formed. So this could unfold as an extended wave to break 1310 support and test June lows. We will have to wait and see the way the market unfolds in the coming sessions. 

Concluding, bears have the upper hand as long as the prices stay below 1375 and will get stronger if 1310 is broken. Bulls have slim chances of survival, since no clear and complete impulsive 5 wave upward move has completed from June lows. The overlapping structure of the waves implies correction. When the correction will end (it might have already ended at 1375) the downward trend will resume to new lows ( lower than June lows).

Thank you for taking the time to read my post.

Thursday, 12 July 2012

Gold in tight range will make big move soon

Gold continues to move inside a tight trading range as mentioned in previous posts. Gold will soon break its support at 1525$ or its resistance at 1640$. Whatever happens a big move will follow. Its best not to pick sides right now, but place stop orders at the extremes of the trading range. If 1525$ is broken, then my target will be below 1400$ at least. If gold breaks above resistnace, it can go towards 1750-1800$ if not towards new highs.Whatever side of the market you choose, place a stop order to protect your money because the expected move will be big.

Wednesday, 11 July 2012

DJI and S&P elliott wave counts

Intraday analysis in S&P and DJIA shows that market has topped and is testing important support levels. S&P in the 60m chart can be counted as a complete 5 wave formation from 1374,81 to 1346,65 low. That could very well be wave 1 and now we are in wave 3 down. There is also an alternative count relative to how we choose to view the movement from 1346,65 to 1361,54. If this is part of a 4th wave, then the 5th wave ended yesterday and we should expect an upward correction. We prefer the first count because it matches our wave count in DJIA.

DJIA as seen in the 60m chart, has most probably finished 5 waves down and its upward correction. Yesterdays new low may signal the start of a new downward 3rd wave. DJIA has important support levels at 12400-450 that if broken will support bearish scenario. S&P has important support at 1310-05 that should hold if bulls want to regain the upper hand.

Thank you for taking the time to read my thoughts.

Tuesday, 10 July 2012

No sign of support in EUR/USD

 EUR/USD continues its downward trend making small pauses on the way. We believe that 1,20 will be visited very soon as any upward move looks corrective and weak. On the 4 hour chart the pair has broken the middle pitchfork support and back tested it in the previous 2 sessions. The decline has an impulsive structure that supports our bearish view that was noted again from 1,26 levels.

Taking a closer look at the intraday chart, it's much clearer that the trend is down with some upward corrective bounces along the way. 1,2220 lows are going to be tested. In order for a larger upward move to happen, the pair must move above 1,2340. Concluding, the trend remains down with targets at the area of 1,20-21. Bears should cover above 1,2350.

Monday, 9 July 2012

S&P is ending move from 1310

S&P as expected last week has found support at 1350. That was our 4th wave target. Now it is ready to continue the upward move that started at 1310. Wave 5 has already started and our first target is 1380-90 area. A move under Friday's low will complete 5 waves down from 1375 high and decrease dramatically any chance to move above 1375. 

Our most possible scenario is that we have finished wave iv and already are in wave v. At this point bulls don't want the correction to overlap wave i at 1335 and of course to stay above 1310-05 level. Bulls should be very cautious and on high alert as the market looks like it is topping.

Friday, 6 July 2012

GOLD and S&P update

 Gold continues to trade within the 1540-1640 range. This might be tiresome for many traders, but very helpful to others. Sell near the top range and buy near the bottom. The good thing about this trading range is we have clear levels that if broken, gold will make a strong move towards that direction. Gold has made a triple top in the area of 1630. It has made 3 consecutive lower lows and got rejected yesterday, unable to break higher. It lost nearly 25$ in just a few hours towards 1597$ and then bounced towards 1610$. A break above 1625$ would be a bullish sign and that should be a stop level for any short position in my opinion. Bulls will remain comfortable as long as gold does not break 1525$. Soon this range will break, but we don't know yet towards which direction. If it breaks above 1630-40 then 1750 will follow. If 1530$ is broken, then most probably 1375$ will follow.
S&P made a pause to the recent rally and is probably consolidating in a 4th wave towards 1352-55. An hourly close below 1363 will push towards our first target of 1352-55. If the form of the decline is impulsive we should also take into consideration the possibility that the upward move is over and a correction to test 1340 will come. Important support levels are 1335 (wave 1 top not to be overlapped) and then 1310-05 major support for any bullish chance to be viable.

Wednesday, 4 July 2012

EURUSD before the rate cut.....

Todays focus is on EUR/USD. As we said in a previous post, this pair has broken the green support line and looks like it has started a new downward move to test the lows. We also mentioned that in the short term it had reached the middle pitchfork support and that a bounce was imminent. And that is what it really happened. Now that EUR/USD has back tested the green upward trend line, has found resistance in the upper pitchfork. Tomorrow ECB is expected to cut the key interest rate by 0,25 basis points. Our view is bearish with a stop above 1,2750 and target at least 1,24. Whatever decision is taken tomorrow, our view is downward biased with a stop limit at 1,2750. Break of 1,24 will give targets below 1,20. 

From an elliott wave perspective, the rise has been overlapping, thus corrective, and the decline impulsive. This characteristic added to our technical view, supports our bearish feelings towards EUR/USD.

Tuesday, 3 July 2012

DAX finally picks up and ready to finish wave 2

Our bearish scenario of a complex correction in the US , has helped european indices gain more time to complete their correcton waves. European indices needed also more time for the correction to complete, but also needed an upward push so that the necessary price levels were reached. US markets corrected nearly 61,8% but the european ones only 38%. The european summit last week gave the markets something to be happy about and most european indices rallied towards wave 2 retracement targets. 

DAX has almost reached the 61,8% retracement, whereas CAC  has touched the 50% retracement. As second waves, both in time and price levels, these waves are considered completed or soon to be completed. The form of the upward movement, in both indices shown in the charts, is not clearly impulsive. The bearish scenario that applies to S&P too, has synchronised both US and European markets. So should we expect a decline of a 3rd wave proportion? If our wave counts are correct, then a 3rd wave down will follow. Breaking June lows would confirm this wave count. Breaking last weeks lows will only increase the chances of the impeding decline. 

Summarising we are close or at the end of wave 2. Wave 3 down will be strong. If this wave count is not correct, we will not break June lows. 

Thank you for taking the time to read my post.

Monday, 2 July 2012

Greek stocks expected to outperform

 Greek stocks are taking a break from the continuing decline and intense selling pressures. After the Greek elections and the european summit one can say that something interesting is brewing in greek stocks. Some positive signs of a price trend change are there, but are they strong enough to change longer term trend? The market is bouncing and is at least in an upward correction phase. Hard resistance levels are ahead and the market will surely test its powers.

 Taking a close look at the Athens General Index, one can see that this index is near the completion of a 5 wave impulsive move upwards. What follows is a 3 wave correction and another 5 wave move towards the direction of the first impulsive wave. Even if this upward move is corrective, it is not over yet. More upside potential is there.
Moving back and looking at the weekly chart we find resistance at the 700 price level. If broken upwards, the market could at least make an upward correction similar to the one back in 2009. The bullish scenario however takes for granded that the low is in at 471, and the trend has changed. However it is too early to support such a scenario as its chances are still very low. Breaking resistances like 700 and then the 850 price level would increase chances for a trend change.

Either way the market looks like it is going to be 'hot'  during the summer and many opportunities will arise in greek stocks with great potential to double or triple value is expected. Keeping a close eye and a closer stop order could prove very profitable since the market is still close to its lows.