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.

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.

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.

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.

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.