The Market Pulse

Often the market follows a path that I expect and hits my target while there's times where the market proves to be like a spoiled child that won't behave. So Monday, I set the stage for the unexpected with the following chart with the expectation that we would possibly see another round of selling pressure or that w.4 had already completed. At this point I must concede the bearish count and adopt the count in the chart where w.5 of w.(3) is now underway....

.... but this count comes with another potential problem. That being if w.5 of w.(3) terminates at 1432.24, then w.3 < w.1 and w.5 thereby breaking an Elliott Rule. Currently, w.1 is already longer than w.3 so if this labeling is correct then w.5 must end prior to 1432.24. Notice the cloned line of w.3, extended from w.4. This would indicate that w.5 = w.3 at 1413, so that's my line in the sand to maintain this wave labeling.  As more bars of w.5 are added to the right side of the chart I will be able to provide additional upside targets. For now, the minimal expectation is a new recovery high.

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The Maket Pulse

Tonight's update will be brief as much the content updates the analysis that was posted yesterday and updates the charts. If you missed yesterday's edition of Heard On The Street, you can listen to it by clicking the link.

At the 240 minute chart level, the mark opened up, closed the gap at 1315 and then sold off hard. The Doji candle, forewarned of indecision, which was followed by renewed selling pressure as represented by the bearish candle. Price traded to within a point of the .382 retracement of the advance from 1279 to 1315.25.  While the decline is constructive by the modest break of the lower boundary of the corrective price channel, only a five wave decline would indicate that the bears have regained control. Keep in mind that the initial decline from 1343.25 to 1243.25 can't be counted as a clean five waves. Readers of EWL, know from previous readings that there is a high probability that the decline was only in three waves.

However, that doesn't mean that a sizeable decline isn't underway before the longer term bullish trend continues. For example, what if the current wave structure is a 3-3-5 flat? W.4 (red) could decline to just above w.1 (1224.50) without invalidating the bullish count.  Of course should w.c of w.4 = w.a, at 1215, then the count would be invalid as a fourth wave can't enter into the span of w.1.

For tomorrow and Wednesday the key to identifying the overall wave structure is whether the decline from 1315.25 is in three or five waves. Should it develop in three waves, then the possibility of a triangle w.4 could be developing.... but I'm getting ahead of myself, so let's remain focused on one wave at a time.

Support below the market is 1292.7 5 - 1294.75. Structural support lies within w.(a) at 1296.25. So be looking for the current wave down to complete at these levels. We'll see what transpires thereafter and I'll post intraday updates on Twitter.

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Heard On The Street

The wave pattern in the e-mini S&P's is still not resolved but the bearish view appears to be in trouble as time and price relationships must quickly be met or the bulls remain in control of  this market.

View my bullish and bearish wave counts as well as an update on the EURO-USD in this weeks video edition of Heard On The Street.


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ES_F: Intraday Perspective

Attached is the intraday chart. The count looks incomplete and another push higher is required to complete w.(c) of w.y circle where w.(c) =w.(a) at 1304.5. Should this level fail to contain the rally, review yesterday's comments for more detailed information regarding further upside potential.

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The Market Pulse

The Market continues to rally to the upside against the decline from 1343.25 - 1243.25. From 1243.25, there are several waves that overlap giving the appearance of a countertrend move.... a W-X-Y double zig-zag. For tomorrow, I'm looking for a further price advance to 1304.50 -1305 where w.c of w.y =w.a. Also note that the lower end of the gap will act as structural resistance. Should the market push through these key areas, then the next zone of resistance is where w.y = w.w at 1312.5.

Failure to penetrate 1296.50 would call into question the immediate wave interpretation and open the door for a retest of 1279 possibly lower to 1268-1270.75.

Since the jury is still out on whether the decline from 1343.25 - 1243.25 is just a correction, I'm focusing only on the current wave structure. Depending on your view of the market, one could also argue that the rally form 1243.25 is a leading diagonal. Regardless of which view is correct, the outlook for the market once the rally completes is still to the downside. The only difference is by how much.

Tomorrow will bring with it another piece of the puzzle. Let's see what develops. 

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Heard On The Street: #ES_F #Gold #Oil #Currencies

Over the past few trading sessions, the S&P has managed to rally 41.75 points off the 1243.25 bottom before giving back 10.75 points of those gains to close at 1274.25 on Friday. The advance could be aattributed to the positive news that the UN voted in favor to establish a No Fly Zone in Libya and that the Japanese were making some progress in their battle to cool the earthquake damaged  nuclear reactors .... but from an Elliott Wave perspective, the rally appears corrective.

My March 13, 2011 update identified certain 3 cycle periods that called for the next market low to be made on 3/22 - 3/23 +/- 1 day. The question is, now that the S&P has rallied, will it roll over hard and put in the low that I called for?

To answer that question plus updated charts on the currencies market, Gold and Oil... watch this weeks video addition of Heard On The Street.


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ES_F: Flash Alert

There is evidence that the advance from 1243.25 to 1285 represents w.iv of w.1 down. The advance terminated just shy of the .50 retracement of w.iii circle. Price should not print above 1285, so that's key resistance. I am maintaining critical resistance at 1292.5 to allow for a slightly higher advance and a test of previous support .... now resistance (red line). However traders must be cautious in that this also marks the point where w.iv can't exceed this value by 1 tick to maintain the bearish view. A print above 129250 invalidates the interpretation  and I'm wrong.

Downside targets provided in the charts, as well as the 1.272 - 1.382 RF extensions from w.iv circle. These are not draw to maintain a clearer chart.

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The Market Pulse

Earlier today I was looking for a counter trend rally to correct the decline between 133775 and 1251 in the front month contract. What started off looking like a triangle w.b quickly soured into another substantial decline after the EU Energy Commission said that the Japanese nuclear situation was out of control. The two charts above reflect what did and didn't happen.

What can be drawn from these charts is that the market doesn't care what I think and it trades to a point where the most pain can be inflicted upon traders. That point was below the nest of stops at 1251 where dip buyers stepped up to the plate in hopes that the "buying the dips" mentality was gonna work forever.  So naturally, when US Energy Secretary said that they believe a 'Partial Meltdown' Occurred in Japan... the market was driven down by the shorts, triggering stops then they bought all those sell stops and the market closed at 1255.

THE BULLISH CASE


As of today, odds are that the alternative count (a triangle w.(b) ) can be eliminated due to the depth and slope of the decline from 1323.50 on the daily chart of ES1-057. However, as cynical as this will sound, I know this market is manipulated. I am seeking confirmation that an even a more bullish interpretation can be extinguished. When this happens, there's gonna be plenty of downside to this market. So before I reveal my bearish count, allow me some latitude to share the alternative view.

This count assumes that the rally from 672 is a correction within a bear market rally. As it stands, this count will be eliminated when price trades one tick below 122450 as what is now labeled w.4 can't enter the territory of w.1 according to the rules and guidelines of the wave principle. But a word of caution, fourth waves usually find support from the base channel that can be established between the first and second waves. As of the close, the market has reached that channel. So at least be on guard for this possibility that a new recovery high can still not be eliminated.

THE BEARISH CASE

The decline from 1343 in the daily continuous contract counts best as a three wave structure. Therefore another up, down would be required to officially label the chart as a five wave structure. As we learned today, bear market rallies can also be shallow so look for any three wave rally to end between the typical Fibonacci retracements associated with fourth waves (.236, .382 and .50). Personally, I think the market will test the lower channel line before a final round of selling to complete w.1. Targets for the termination of w.1 assume that any corrective w.iv will reach the .382 retracement. Any print above 1292.5 negates the bearish view as w.iv can't enter into the territory of w.i.

Bottom line - we know what key levels render each view incorrect.

I hope you found this information helpful and .,,,

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CAC 40 : Flash Alert

The CAC 40 completed a terminal ending diagonal to complete w. 2 circle. Current price action confirms the diagonal as once a diagonal completes, it retraces the move from it's origin very quickly. As such a retest of 3256 would be in order.

Let's see what transpires.

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ES_F: Flash Update

The market tanked after the EU Energy Commissioner said that the Nuclear situation in Japan was out of control. Yet earlier I warned that a loss of w.(a) and w.(c) may lead to a more complex w.b.

Looking at the intraday chart, w.b circle retraced approximately 90% which is typically associated with a flat correction followed by a rally to w.c=w.a at 128825.  If so, 125550 must hold; therefore, it's critical support. A break below 125550 would set up the potential for a test of 1226-36 support area.

I hope you found this update helpful and ..

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Before The Bell

The ON session has produced the bounce that I was expecting but the market was unable to push through to my 1298 target as overhead resistance of 1283.50 held the advance in check.

For today, the advance from the 1251 low, continues to look like a corrective wave pattern that is currently working a triangle w.b circle. Prices should chop around sideways before eventually breaking the upside boundary of the trendline, with a minimal target of 1286 but most likely a retest of the previous w.4 at 1303.75 is in order.

The loss of w.(c) and w.(a) would most likely mean that a more complex w.b cirlce was unfolding before an eventual rally to complete the corrective structure. As soon as the w.b circle is complete, I will update readers with more defined upside targets.

I hope you found this information helpful ...

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ES_F: Intraday Chart Update

In last nights post, I mentioned that I would become more bearish if price could close below the lower trendline of the base channel. The attached chart shows that price has traded below the channel. Should the market close well below the channel, odds are that a bearish third wave is underway.

... and here is the weekly chart level. The next area of support below the market remains 1226-36.

Let's see where we close.

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The Market Wrap

The weekly chart of the all sessions contract has been updated to include today's session. For those readers who may have missed my weekly publication, this chart and the subject matter of tonight's post will be a follow up to that video. If you haven't watched it click here

The Market continued to test lower prices but the the 127720 support area is formidable. Should that level be broken to the downside then I'll be looking for a test of 126260. Deeper support comes in between
1226-36.

At the daily chart level, the session ended with a candlestick pattern called a djoi. Dojis reflect indecision... a warning sign to traders that may signal that a change in momentum is nearby.  Given the bullish secenario that I have detailed in my weekly publication and the fact that the doji is confirming nearby weekly support of 127720, I just may have been one bar early in the wave count and calling a short term bottom. Regardless, the chart still doesn't count well and nothing that transpired today changes the forecast that I provided in yesterday's video.

Here is a closer look of the daily session and doji, along with upside resistance labels. If the bearish interpretation is in the cards, any rally attempt may test the downside trendline of the triangle and open gap at 1312 before another round of selling.  Given the lackluster close and the fact that the door remains open on both counts, what would really convince me that the bears were taking control is a significant close below the price channel. Tomorrow, that line crosses 1276.

So until the market shows it's hand, we need to remain patient.  Until then,

Best of Trading

Heard On The Street

In this weeks Edition of Heard On The Street, I take some time to explore the cyclic behavior of the S&P and present a bearish and bullish case for the upcoming week of trading. Watch this video to learn where the market may be headed and why.


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ES_F Updated Chart

Traders,

Here's an updated chart for the ES_F at the 10 minute chart level on the QT. This is what I am ANTICIPATING for in the near term. W.a circle ended just beyond where w.c = w.a at 129650. W.b is possibly unfolding in an expanded flat that should pullback to test the 1290 - 1292 fibo.

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ES_F: Flash Alert

The ON session may have brought some clarity to the wave pattern that began from 1343 (ES1-057) or 133775  (ES-2001106). While none of the pivots that I mentioned in yesterdays post have been broken to signal a near term trend change, I thought that I might provide readers with a possible scenario that might be unfolding.

Looking at the 240 min. chart level, I have labeled the wave structure as a W-X-Y, where w.C of w.Y is unfolding in an ending diagonal and w.Y is a flat correction. I've also included several areas that you might want to watch as the market approaches them. If this scenario plays play out, two Fibonacci clusters are significant:

1. W.Y = W.W at 128125 which is also a 1.272 RF extension of w.b (red)
2.  W.Y= 1.382 RF extension of w.b (red) that is in agreement with 127725... the .382 retracement of w.(4).


As always, trade your levels. Allot can happen that can change this interpretation between the time of the post, the jobs report and the open.

I hope you found this information helpful.

Best of Trading

The Market Pulse: NASDAQ and S&P

The Market has virtually no net gain or loss since March 2, 2011. By now every trader has their eyes on what appears to be a triangle pattern. With tomorrow's jobs report, traders may finally push the market in the direction of the "new" near term trend. So look for some volatility tomorrow.

Earlier today I tweeted that the NASDAQ was the weakest of the indices. I think it's important to cover this market since the greater possibility exists that the NASDAQ may lead the other markets down. Price has tested the 50-sma on five occasions. A print below 230625 would have further bearish implications, yet support is lurking just below the market at 2303 and 2281 - 2282. I wouldn't doubt that a stop running exercise will unfold. Should any sell off have substance, my near term target is 2258.

Turning my attention to the ES_F market, you can see that the market is yet to challenge the 50-sma and price is oscillating along the lower elliott channel line. As a reminder, a significant break of this line on a closing basis and a print below 130275 would negate any idea that a triangle was unfolding. Keep in mind that the March contract expires so the equivalent in the June contract is 129825.

If the wave structure is a triangle fourth wave, then w.e circle may have been struck at 1312.27 that was  followed by a minor five wave advance and as of the close... a choppy second wave is developing. This interpretation would be confirmed with a print above 1325.74. Thereafter, price will make a new recovery high to beyond 1344.07 in the $SPX and 1343 in the ES_F.

In conclusion, tomorrows trade centers around 1325.74 (bullish) and 130275 (bearish) in the continuous contract or the equivalent in the June contract is 129825 (bearish).


I hope you found this information helpful.

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The Market Pulse

In this weeks edition of "Heard on The Street", I laid out a bullish and bearish forecast for the S&P with the expectation that the index would have to fall hard today in order to maintain my bearish stance.

After the opening bell, the market quickly turned tail and sold off  on higher volume. That's another distribution day where institutions were selling. The lower boundary of the Elliott Channel also gave way bolstering the bearish case. This was what I wanted to see and is typical of third wave price action.

The clearest wave structure can be seen in the S&P cash, rather than the E-minis. A series of 1-2's has developed but I would like to see a further decline whereas price breaks critical support at 1294.26 or 1292.5, the equivalent in the ES-F. Until then, the alternative count remains viable. Likewise a break above critical resistance at 1332.28 or 1332.50 in the ES-F, would signal that the alternative count would become the preferred wave count and that price would make a new recovery high above 1343.

I hope you found this information helpful.

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Heard On The Street: Gold Oil Ratios... a tool to measure markets

The Gold-Oil Ratio is a tool, a barometer of sorts, that I use to provide the basis for macro views and the context for confirming wave counts in several markets. Learn why the Gold/Oil Ratio will continue to fall and it's implications for the USD, commodities and equity markets in my latest video edition of Heard On The Street.

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Chart Of The Day: The Gold/Oil Ratio

Gold and Crude Oil have been on a tear since the 2009 low.  Readers of EWL were most recently updated on my bullish stance towards these markets while some elliotticians had called a top in Gold and Oil. 

The wave principle provides the context for determining the markets position and it also gives you an way of determining the probability of a future direction for the market. Today's chart of the day features a the Gold/Oil Ratio.

The significance of this chart gives traders an unfair advantage over other traders by it's ability to forecast the US economy, the USD, Commodities and direction of the equity markets.

Print out this chart and label the corrective wave structure from the high of 27.8... then compare it to my elliott wave count as I revisit the chart of the Gold/Oil Ratio and show readers how it fits into my macro view for Gold, Oil, USD, Commodities and the S&P.

You'll find all that in my special video edition of "Heard On The Street", published on March 6, 2011.

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The Market Pulse

The last time that we spoke I left you with the following chart where I laid out a possible scenarios for the termination point of w.ii.

As it turned out,  the swing high was actually struck at 8:30 EST Tuesday morning at 133650 in the front month contract. If you were only watching the continuous contract, you may have missed a great opportunity. That's why its so important to look at the combined session, the front month, day session and the back month contract. In doing so, you'll always be way ahead of other traders.

Volume rose on the NYSE, logging yet another distribution day (marked by the red arrows)... the fifth since February 1, 2011. When institutions start heading for the exists, you don't want to get in front of that freight train as any profits that you have will be decimated quickly. Astute traders know that institutional buying and selling can be determined by evaluating volume. I first made mention to the fact that institutional selling was present in early 2011. For more detailed information on identifying tops and that post, click here.

Case in point, if you were long from 129250, your gains were cut by 80% in a day!

As of the close of today's trade, the market made an initial move up that was weak in my opinion and then chopped around in a sideways fashion. My preferred count for the market is given where w.iv of w.(i) is unfolding. My immediate downside target for the completion of w.v of w.(i) are 128988-129875. Also note that the 1.282 and 1.386 RF (not shown) of w.iv lie between 129725-129825... so odds are that the 129725-129875 level is a logical are for w.v of w.(i) to terminate. Should that level fail to provide support, then the next level is likely to be achieved.

My alternative wave count is that w.v of w.(i) ended and w.(ii) to the upside is unfolding. This can best be seen on the chart of the $SPX. Given the markets wave structure, I would find it difficult for the market to retrace beyond 131734 in the $SPX and 131675 (the equivalent in the ES_F) before resuming the larger degree trend down.

I hope you found this update helpful and best of trading.