The Deviant Standard

Traders' preparation for volatile markets.

Browsing Posts tagged Stock Market Forecast

Today’s persistent strength has forces us to give more weight to the possibility of an upward retrace that reaches much higher than where we are today.  We had always considered this possibility, but had not given it much weight until today.  Evidence suggest that we’ll see at least a small down move soon, and the development of that move may help us to discern more about the retrace.  Read the details in today’s issue of  TheDeviantStandard(PDF).

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Taking out 10,314 caused some problems with the count, but it’s not as if we weren’t anticipating the possibility.  We lay several possible scenarios from here and establish the guideposts we’ll use to assess which one develops in the medium-term in the latest issue of The Deviant Standard (PDF).  Whatever those moves are, we still expect the broader move to be down.

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Having taken out the swing highs that we previously identified as wave 2, we are now in a position to revise our count. Look for ideas in tonight’s update. For the moment, nothing alters our overall bearish view. To do that, we’d need to identify a larger degree upward impulsive move.

The most obvious way to count a possible larger five up is shown in green on our 10 minute chart. For the time being, it shows divergences on both the Elliott Wave Oscillator and MACD at today’s intraday highs. A good impulsive move up should give us higher highs on these indicators. So a bullish view would require green [iii] to continue extending upward to new highs and put in new highs on our technical indicators.

We need to watch these indicators closely, because there nothing that prevents prices from heading up and doing just that. A break below Dow 10,150 would help rule out this poissibility, but wouldn’t prevent higher prices from a more complex correction than we currently have counted. At the moment, no down move is confirmed; just possible.

[Click image to enlarge]

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We were wrong about our outlook for today — well, partly wrong.  We had specific plans for what to do if we exceeded Wednesday’s highs, even though we were expecting things to go lower.  Nevertheless, days like this should raise many questions.  In an abbreviated issue tonight (PDF) we look at some of those questions as we prepare for Friday.  We’ll have more comprehensive analysis over the weekend.  Even if we don’t know what will happen tomorrow, we do know that fortune favors the prepared mind.  Trade prepared.

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As waves continue to emerge, there are more and more strucutres that have fib ratios consistent with a target near our 10,184 FibGrid on the Dow.  Having those proportional structures show the markets inherent knowledge of these levels.  However, in itself, it doesn’t indicate a likelihood that the market will go up. 

However, the levels themselves have a sort of gravity, especially the important ones; there isn’t a level more important than 10.184.  So having popped this close, one last touch may be in the cards.

All speculation at this point. I’ll try to cover the ratios in more depth tonight.  However, this next issue might be abbreviated.

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If we keep pushing up then this (link to image) could be the count.  It is a reasonable double zig-zag with [W] = [Y] and A=C within [Y]

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Have you had Skyline?  The Cinicinnati chili, I mean?  Sure it tastes great, but I can’t imagine it’s good for you and it can give some nasty heartburn.  So while the Dow took a big bite out of the 10,120 skyline this morning, perhaps indigestion is why it’s having trouble on a retest.  It’s retreat from those levels looks corrective, ocurring in three waves.  However, attempts to push back up have been rebuffed.  If it decides to weather possible stomach discomfort and head on up, then I’ll keep looking at that 10,184 level.

Continued chopping here might lead us to try and count a fourth wave triangle if it has the right look.  If such a pattern develops then it would help give clarity to the wave structure and help us identify a possible turn down.

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One of the problems with gaps is that they obscure our view of the wave structure.  It also messes with the technical studies we use.  That makes it harder to figure out when a wave is likely to be complete.  If (and it’s a BIG if) this current move is complete then it COULD count out like this:

At the moment it doesn’t look like that count has much chance of standing.  The current move down from the point labeled [5] (likely incorrect) seems to unfold in three waves and being overlapped by a move upward.  This is definitely a wait-and see moment.

In these circumstances we can find guidance from larger proportions.  Our FibGrid levels help as do Fibonacci relationships with larger waves.

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The market showed us early that our expectation are busted.  The 10,184 fire line is at a 76.4% reteacement of the mvoe down from June 3rd highs and would also be near a=c for a revised counting of this correction .  If we take out June 3rd highs then broader counts need to be reconsidered.

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Our 11:11 top call was a tad early, but the same technique found the actual top and both were good trades.  Only one was profitable, but both were good.  In today’s issue of The Deviant Standard (PDF) we have an exposition of the techniques that workd, an update on the additional downside we’ve been expecting and great setups to watch for the model portfolio tomorrow.

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