The Market Pulse

Consistent with Monday's call and the Before the Bell updated intraday chart presented on Tuesday, the emini SP retraced to 1192.5 and has now reached the 1227-28 target zone. With several Fibonacci levels and wave relationships clustered around today's high, as well as supporting technicals, it is possible to consider the advance from 1097 complete. However, the rise from 1192.5 doesn't count well and therefore I need to confirmation that a tradeable top is in place.

Looking at the 7200 tick chart of the September contract, I can argue that we have five waves complete from the top thus supporting my conclusions but I'd like to see a break of 1192.75 on the 60 min, daily session chart, to bolster the interpretation.

Any remaining bullish view clings to a break above today's high of 1229.75.

Let's see what happens.

Best of Trading

Before The Bell

Here's an updated chart showing the subdivisions of the emini S&P futures at the 60 minute chart level. I'm still looking for an down up sequence that supports my blog post from last night. If you missed the call, read it here.

One additional thought in the way of an alternate count. It's possible to make a compelling case that the corrective structure is a flat. Notice the yellow highlighted area indicated that the decline from 1206.25 was an 80% retracement of the previous swing. An 80% retracement is a common retracement level for a flat. Knowing this, it's possible that yesterdays high met the minimum requirements to complete the flat correction. However, just because I could count from 1166.25 doesn't mean that w.iv circle is complete. We need to see confirming price action. Breaks of 1192 , in five waves could be the first clue that a flat correction had unfolded rather than the double zig-zag (W-X-Y).

Let's see what plays out.

Best of Trading

The Market Pulse

Picking up from where we left off last Wednesday, the above chart shows that I was looking for w.v circle where w.(i) had completed. Today's close above the origin of w.(i) or 1206.75 negates any interpretation of a fifth wave and my interpretation is invalid. 

Tonight we'll explore an alternate count.

W.iv circle appears to be unfolding as a W-X-Y, double zig-zag. Several Fibonacci levels ( 1120, 1228, 46-49 ) are the levels I'll be watching for failures and the termination of w.iv circle. Notice that price remains within the corrective price channel suggestion that this rally is corrective and not an impulsive move. On a closing basis, a break above the upper boundary would cause concern for this view.

Helicopter Ben's Meddling Stops The Bleeding

The rally from 1097.5 has the distinct look of Bernanke meddling. Did the market anticipate that he would leave the door open to further stimulus and then rally even more upon the FED's statement? Did the FED talk a good game and place a floor right under the market for a second time? I'll let the market provide that answer.

Even though the bulls are getting a bit brave with the Bernanke Put by their side, I see nothing to indicate that a new impulsive wave has begun. The 2007-2011 analogy that I've been following suggests that today's move, albeit slightly different, at the daily chart level (see charts below), in 2007 still suggests that a final round of selling will occur and draw prices below 1097.5.

The highlighted section shows that a new recovery high did not occur before completing another sequence of selling whereas.....

.... today's rally made a new high adding uncertainty to the overall minor degree interpretation.

 

While the daily and intraday chart levels deviates from the analogy, the monthly chart level that was show in my Global Gains video clearly shows that the larger degree is still very much intact and the rally was called for off the lows.  According to the analogy, the rally ends by months end.

Let's see what happens in the next two trading days.

Best of Trading

Global Gains: 2011 Mid Year Forecast

Announcements:

There will be no weekend edition of Heard on the Street as my Global Gains Mid Year Forecast covers over 20 markets including global indices, currencies, energy, metals and intermarket relationships. The video is over 30 minutes in duration that includes an introduction.

I would also appreciate your feedback on the video, it's content, etc. 



Best of Trading.

Before The Bell: Updated Chart of $NG_F

Here is an updated chart for those following the progress of my Natural Gas trade. Additional comments were posted to the original blog post. You can find them here.

As always, following this trade is strictly for educational purposes! Please familiarize yourself with the Risk Disclaimer and Disclosure Statements make within this blog site.

The Market Pulse

Here is the chart of the September contract that I left readers with on Monday which includes price action through today's trade. In Monday evenings update I said that I was hesitant to label w.(ii) as complete due to the fact that enough time hadn't elaped, i.e. the wave was to short vs w. (i) and also because the depth of the retracement was too shallow to be a second wave.

I also stated that if w.(ii) was complete we should see an immediate decline that would break the lower boundary of the channel and take out w.(b).

As you can see, my analysis was correct in continuing to look for upside potential. Now, the question that remains is where it might end.

At the 60 minute daily session chart level, I can make case that w.(ii) is now complete... yet, it wouldn't surprise me if the open gap is filled before the larger degree trend resumes to the downside.

Therefore, I'll be looking for an initial five wave decline that breaks w.iv support. This should provide the first piece of evidence needed to confirm that w.(ii) has ended.

Should the market extend up in the ON session, I'll provide an updated chart as well as termination targets.


Best of Trading

Is It Finally Time for Natural Gas to Shine?

I've Pulled The Trigger and

Bought Natural Gas Today...

I've had Natural Gas on my watch list for quite some time. With the seasonal trend up beginning on September 2nd (not shown) and the fact that the Commercials are adding to their long positions, I've been waiting for the completion of w.e of the triangle within w.Y. I am viewing the slight break of the lower boundary of the triangle as a throw over. Any subsequent break of w.c (3.39) would negate the triangle interpretation and my bullish view.

At the daily chart level, from the 3.85 low, I was looking for a five wave advance to confirm the weekly interpretation. If correct, price should thrust from the w.e low. Two sets of technicals are supportive of my analysis. The MACD shows divergence as prices made new lows and the RSI broke through 50-60 levels on the rally to 4.02 signaling that the rise was most likely not a counter trend move.

Subsequent price action is in a three wave zig-zag and the market has found support at the .618 retracement  of w.i. I level.

Trading the futures in Natural Gas is too my for my blood so I prefer using the ETF, ticker symbol UNG .

As to properly disclose to my readers, THIS IS A REAL TRADE, NOT SIMULATED! I will be adding ticker symbol UNG to my trade disclosure. You can locate that disclosure about 3/4 of the way down on the left hand margin of the site.

I've indicated my entry which front ran larger orders at 9.93 and the figure where w.(c) = w.(a) of 9.84 which is a reasonable entry level. Risk on the trade is minimal (.24) per 100 shrs. I'll be watching how price reacts off 9.84, unless the structure of w.ii is already completed. My target is a challenge of the 10.14 with much higher potential.

Should price decline from 10.14 and in a five wave move, the analysis is flawed and so is the trade. As such, from a risk management view, I'd be looking to cover on the next three wave rally up.

If you are interested in following the trade, I'll be making regular comments to this post.

Let's see if I can make some coin.

Best of Trading

As always, following this trade is strictly for educational purposes! Please familiarize yourself with the Risk Disclaimer and Disclosure Statements make within this blog site.

The Market Pulse

At the 240 min chart level I an hesitant to label w(ii) complete due to the fact that the market could not even reach the .382 retracement of w.(i).

 

Also from a time perspective, the minimum time relationship for a corrective sequence is .382. As you can see, the w.(ii) completion feel short of this requirement. As such, I'm going remain neutral until the emini SP and look for the following:

 

Bearish

The w.iv circle top has yet to be confirmed by a break of 1103. If w.(ii) is indeed complete, we should see a break of this level as well as a break of the lower boundary of the channel... confirming third wave price action. If both occur, then look for the levels stated in my weekend edition of Heard on the Street as potential targets for the termination of w.v circe.

 

Bullish

A print above today's high of 1146.5 would confirm my suspicion that w.(ii) wasn't complete and that a larger corrective structure was unfolding.





Best of Trading

$ES_F : Updated Chart

At the 240 min level, w. of w.(i) of w.v circle appears complete. As I alluded to in my weekend video that the intraday chart suggested that my larger degree targets would not be reached in a straight shot. e

If the count is correct, then we are witnessing a w.(ii) counter trend rally that should take price to a minimum target of 1150.25. However, there is the possibility that this move up from 1111.25 is only w.(a) of a larger corrective move.

Let's see what transpires.

Best of Trading

Heard on the Street

ANNOUNCEMENTS:

As most of you know, I was planning on releasing my Global Gains Mid Year Forecast this weekend. Unfortunately, I will not be able to meet that deadline but I am actively working on the recording and will notify everyone when it's complete. One thing that readers should be looking forward to is that the forecast and subsequent recordings are using charts that were last updated on 8/12/20011. The recent volatility in global markets will surely be a formidable test of the accuracy of my market calls.

In the interim, we should have an interesting trading week ahead. Watch my weekly video and update of the Emini S&P and be prepared for what may lie ahead.


Best of Trading

Before The Bell: $ES_F

The following chart shows my preferred wave count where w.v is now underway. Yesterday, in the ES1 contract, the market made an initial five wave decline to complete w.i circle.

Likewise, the September contract also completed a five wave decline.

Although the market is down in the ON session, both charts have me looking up in w.ii that should take 2-3 trading days to complete. Of course there is always the possibility that the wave count is incomplete and w.(v) of w.i circle could continue to subdivide. I can make a case for another push down. So allow for further downside risk before w. ii of w. v circle begins.  

In order to evaluate each scenario, the following are my key levels for today's trade:

SEPT CONTRACT:

Below 1117.5 : Negates immediate upside for w.ii development and the count would need to be revised as well as the retracement levels for the termination of w.ii.

Above 1117.5 : Critical support for current preferred wave count and short term bullish bias.

ES1 CONTRACT:

Simply, the opening print must be above 1128.25 to maintain current preferred wave count and short term bullish bias.

Let's see what develops.

Best of Trading

$ES_F: Alert

Last nights uncertainty has just become clearer. First, our bearish level of 1170.25 has been broken to the downside and w.v circle may be underway. Our first clue that the interpretation is correct is the development of a small five wave decline that I can count from 1206.75 - 1181.5. My expectation is for three waves to complete at 1151.75, followed by another up down sequence and a break of the lower boundary of the corrective price channel. Prints below 1103, would be a final confirmation that w.iv had ended and traders have a short-term tradeable top to lean against. I'll be watching for the market to commit these things to me before I commit to it.

While constructive as this price action is early on, we can't forget that this move to the downside could be just w.b of a larger corrective structure that would resolve to the upside ..... fulfilling 1225-30 key levels. Even so, at a minimum, we should see three waves down even if the count doesn't get confirmed by a print below 1103.


Best of Trading

The Market Pulse

Tonight's blog post will be brief as the price action that transpired today didn't bring further clarity to  the overall wave count.  The fact that the market has moved sideways further muddles the wave count.

I have looked at the structure from the 1097 low for over two hours and I can count it a number of ways. All counts leave me with a degree of uncertainty. So while I have published what I would like to see happen, we must be open for other possibilities until the count becomes clear.

Trading Tip: If you can't identify a pattern within 1 minute or less - forget about trading it. Move onto the next market.

What remains clear is our bull/bear lines in the sand. They are:

Bullish : above 1152.25.... possible resumption of bull trend.

Bearish : below 1170... resumes trend down in a possible fifth wave.

Disinterested : in between 1170-1152.25 with a possible top btw 1225-30 for aggressive traders to look for failures.

So for tonight, we'll take a pass and wait to see what happens in tomorrow trade. There's nothing else to do but step aside and wait. Should I see an identifiable pattern develop, I'll discuss it immediately.

Until then...

Best of Trading

The Market Pulse : A Trap Brewing?

Could There Be A Trap Brewing?

I want to expand on my weekend edition of Heard on the Street.... but first if you missed it, just click on the link.

Tonight I would like to review the 2007 swing that we can measure using the 2007-2011 analogy and compare it to the expectations for the termination of the current advance from 1097 and the wave count.

I think you'll find the road-map is crystal clear.

From the weekly chart, the swing from 1262 - 1397.75 was 135 point and a two week (bar), A-B-C zig-zag. Transposing the same measured move, we can estimate that the rally from the current 1097 low still has room to run and could reach 1233. This fits well with my weekend call i.e. the up, down sequence that I'm looking for.

Another key point, is the possible similarities between the 50% retracement levels. If history repeats, the current rally would stall at 1225.

So in comparison , I have established a range of 1225-30 as a termination point.

Also note, that in 2007, price traced a w.b that terminated within the range of the first bar (w.a) of the zig-zag. We should expect the same in 2011.

One last point on today's trade. Even though the analogy is working beautifully, the 10 pt opening gap is a concern, as they are typically found in third waves. It may also signal an exhaustive move (see below). Therefore, while I still have bearish bias, I have set critical resistance at 1252. 25. Any print above this level negates and most likely means that my larger degree wave count is flawed.

Dropping to the intraday chart levels, we now want to look at the internal subdivisions and expansion series to see if they match the 2007-11 analogy script.

First, the current interpretation called for a w.iv = .382 w.iii at 1191 and where w.c = w.a at 1192. Both levels have been exceeded as the count looked incomplete... signaling that the internal subdivisions were still subdividing.

Today's trade and opening gap could signal the end of the move as buyers have exhausted themselves. Certainly, the ending diagonal (wedge pattern) that I called to your attention in the later part of the day on Twitter would support such a conclusion. If w.iv is complete, a loss of 1170.5 should be the first sign that the larger degree trend has resumed. As always, look for a five wave impulsive move to confirm the break.

However, counting the move from 1113.75 (w.(b) low) doesn't count well and after reviewing the analogy, the w. b zig-zag (not labeled --- 1262-1397.75 in 2007   -- see weekly chart above) was small. Therefore, I'd like to offer this alternative interpretation (notice I didn't say alternate) that better suites both the analogy, current price action and termination levels of 1225-30 established by my earlier analysis.

From a trading perspective, the later count, if correct, will play out as inexperienced traders get caught in a a bear trap, thinking that the ON session or early weakness in the daily session will lead to new lows. It might but we know that 1170 MUST FAIL to bolster the near term bearish view.

We'll leave it there for tonight and see what develops.

Best of Trading

Heard on the Street

Does a Recent Fibonacci Expansion Series

Confirm the Bear Market Return?

Announcements:

• On August 20,2011 I will be releasing my Global Gains -- Mid Year Forecast covering 20 markets (World indices, Currencies, Energy, Commodities and Metals) as well as some key intermarket relationships that you should be watching.
• In September, watch for details on my new premium service Signal Watch RT ® -- a premium service -- providing insightful, real - time intraday elliott wave analysis. A complete list of features, benefits and special discount pricing will be available for current Twitter followers.
•  Not a Twitter fan? You can get my most recent blog posts quickly and easily by "following my blog" or subscribing to my RSS feed. See the top right portion of my blog for details.

 The Market:

The Emini SP continues to follow my 2007-2011 analogy. It's interesting to listen to and read the bull/bear debate from the talking heads and other pundits. I'll stick with the charts!

Listen to my weekend video -- Heard on the Street -- to gain unfair advantage over other traders during the upcoming trading week.

Best of Trading

Chart of the Day: Using Elliott Wave in Real Time

A recent call illustrates the benefits of using the Elliott Wave Principle to manage trades. Watch this video as I go over the trade plan, the trade set up, and real time application of elliott wave.



Best of Trading

ES_F : An Early Perspective

Last night I left readers with this scenario. The chart has been updated to reflect most recent price action.

In a follow up to last night chart, above is the 7200 tick chart from the most recent pivot low. Notice that the price action is sideways, choppy and contains multiple wave overlap. This confirm my initial assessment of the market. Accordingly this is corrective price action. While the 120 minute chart level has provided our context for a potential  upside target, there are no assurances that another, more complex corrective pattern isn't forming. Patience is required while stepping aside until the pattern can be clearly identified. There remains a high probability that new lows will be reached to complete w.v of w.(1) not show.



Best of Trading

The Market Pulse

It seems like days since I began looking for w.iv circle to unfold. The price action on the 120 min chart level appears to finally, yet violently, be putting together a sideways move. Earlier today I tweeted that wave overlap had occurred and expected the entire move from w.iii circle or 1097 to be fully retraced when the pattern completed. I stand firm in that assessment.

Also note that w.iv circle looks like a flat correction (3-3-5). However, any corrective pattern that begins with a three wave structure could also develop into a triangle or combination. Therefore, we'll remain on guard to these alternate possibilities.

Should the flat correction play out, it's the perfect set up where w.c of w.iv circle = w.a at 1192.25 and is in agreement with the most common .382 , Fibonacci retracement,  for 4th waves at 1191.25.

One caveat is that on lower time frames, w.(b) may not be completed. If it isn't , then I may have to revise my upside targets.

A loss of 1097 before reaching beyond the w.(a) extreme of 1175.5 would negate this view and the pattern would need to be reassessed.


In conclusion , the trend remains down with the full expectation that a new low will occur and that the Bear Raid is incomplete.

Best of Trading.

After the Bell : 2007-20011 Analogy Update

The above chart updates the 2007-2011 analogy that I have been working. In 2007 the decline from 1527 to 1262 took 6 weeks and fell 265 points. Fast forward to 2011 and the decline from 1352.75-1097 took 5 weeks and declined 255 points.

Coincidence? Nothing is guaranteed but like they say.... if it isn't broke don't fix it.

Best of Trading

The Market Pulse

What a day today was. This daily chart level of the $SPX shows that the decline gained momentum, as measured by by the ROC. Volume was the highest since 5/2010 and has been increasing from 1346.1, a clear sign that institutions are dumping shrs (distribution days) at an alarming rate.  In such cases, one doesn't want to be in front of that train wreck.

Here is the chart I showed in this weekends video. I  had mentioned that I was taking a more conservative approach by using a less aggressive wave count and that I didn't think that the market would make another low UNLESS the move was a fake out.

Clearly, the failure of the market to make a larger w.4 bounce indicates that a more aggressive count is in order. W.3 red is the extended wave of w.(1) {not complete or shown} but determining which wave is extended within w.3 of w.(1) is practically impossible to identify at this juncture. My best guess, is that the market is still subdividing within a 3rd of w.3 as the past two trading sessions were the steepest declines and traveled the greatest distance in the least time. The technicals show above seem to confirm this opinion.

BOTTOM LINE: As soon as I can identify a significant turn, I'll discuss it's implications as well as provide an updated wave count. Until then expect the market decline to continue, even though it's severely oversold. 

Best of Trading

Heard On The Street : Panic and Chaos

ATTENTION: New readers and loyal subscribers....

...Imagine the chaos and panic that may hit world markets --

 then decide how you'll protect your money on Monday...

Traders,

The past week has certainly been challenging to say the least and after the S&P downgraded U.S. debt, any glimmer of hope that traders had at Friday's close may evaporate.

What if the market is unable to catch a bid come Monday morning? Watching the market free fall without a plan to protect yourself won't be fun. After all, most portfolios haven't recovered since 2007 and the losses could be much greater this time around.

Since my July 17, 2011 call , I’ve been warning readers that the end of the bear market counter-trend rally was coming. In fact, my 2007-2011 analogy of the emini S&P demonstrated the fractal nature of the market, how the pattern would progress and the targets associated with the call. In fact, I've sent out multiple updates on Twitter and through my Monday- Wednesday-Friday blog posts keeping you abreast of the markets. 

I'm guessing that subscribers like you either protected yourself from the market's recent carnage or were already prepared to discuss it with your investment advisor and take advantage of it as a result of my forecasts ...

... but if my forecast didn't raise your eyebrows because you don't realize the benefits of Elliott Wave Analysis I can only hope that the events of this past week will change your mind.

Thursday’s 512 point Dow and 60 point S&P loss was just part the beginning, not the end. And if you are a bull, the losses you’ve taken so far could get much, much worse. 

What if you had know in advance, like my readers, that my target level for the S&P was 1166? What if you had that number in your pocket since the July 30, 2011 call and that the level was briefly surpassed on 8/4/2011 before staging a minor reversal.

It’s not too late for you to realize the educational benefits that I provide and the power of the Elliott Wave Principle. Sitting on your hands and waiting for the Central Banks around the world to come up with another ingenious plan is the worst move you could make.

Introducing Signal Watch RT  ® -- a premium service -- providing insightful, real - time intraday elliott wave analysis

There's one request that I've heard from readers again and again and that's more live, hands - on real-time wave analysis. Now if that sounds like something you might want to hear more about, Signal Watch RT ®, may be the solution you're looking for. You'll know what the market is likely to do and when it is likely to do it.

Next month, watch for a complete list of features and benefits and pricing but today I want to thank you personally for joining our community of  Elliott Wave Live readers. Roll up your sleeves, lock the door behind you, watch the video below NOW, then peruse my achieves (lower bottom right fold) and join my blog if you agree that my work is insightful.

Best of Trading,

Mike Sinibaldi 

Before The Bell: $ES_F

Today's positive Non Farm Payroll data has lead to the following price movement. My labeling shows  how I am viewing the move.

Price has reached the 1.618 extension that is typically the limit for any corrective move UNLESS a complex correction develops. I have no way of determining this at this juncture. If a simple a-b-c took place, then we should not see a new high and the move will be fully retraced.

Conversely, we must be aware that the market is severely oversold, that I can identify divergence and that a larger rally should be in order that moves prices much higher than current levels.

Note : A break of 1202 confirms a corrective wave interpretation ... not the resumption of the bull trend.

Best of Trading

Silver:Revisited

Is There Still Silver In These Hills?

The following chart is part of my initial commentary on July 28, 2011. As you can see my analysis for the termination point of the corrective rally was incorrect as price exceeded my invalidation point of 41.97.

Here is the updated chart through today's close. From the w.iv circle low of 39.13, a small five wave advance where w.v = .382 w{i-iii} at 41.92 took place and is in agreement with the 1.618 RF extension of w.B red. Also note that the bearish reversal that occurred today is also what one wants to see if a top is in... i.e. a swift retracement of w.v in less time than it took to complete.

Additional evidence of a w.(2) crest can be found by looking at the MACD technical study that shows a divergence as noted by the green lines.  This market should remain under selling pressure in the days to come.

Best of Trading

Before the Bell: $ES_F



Just a quick scenario that I'm looking for. The chart is self explainitory. I haven't been able to update the subdivisions of w.(c) of w.(iv) due to the fact that I want to get this information in your hands right now. A print above 1254.5 negates.

There are other alternatives and this is only want is anticpated based upon the larger degree trend.

I'll update everyone with a Twitter update.

The Market Pulse

The market appears to have hit a bottom today at 1230.25 which was just points above the .382  retracement (1229.25) of the swing between May 2011 high of 1367.25 and the July 2010 low of 1006. Notice that prices are retesting the neckline of the Head and Shoulder pattern.

From a 20 min perspective, I've identified the low as w.iii circle, implying that I'm looking for w.iv to the upside, followed by a fully retracement. However, it's often difficult early on when deciding with absolute certainty which wave is the extended wave. Final reconciliation of the count will be influenced by the depth of the retracement from the 1230.25 low.

Most recent price action has been identified as a double zig-zag that should push higher to 1271-73 range with 1273 representing a .382 retracement of w.iii circle. There is also resistance at 1262 that could cap the rally but I believe the higher probability exists where w.y =w.w at 1271.75.

Tomorrow is the Jobless Claims and Friday is Non Farm Payrolls. I'm sure everyone will be looking for further evidence that the economy is on weaker footing. It will be interesting to see the extent of the bullish resolve to push this market higher in the face of strong headwinds.

Best of Trading

The Market Pluse: An Interim Report

With two trading days in the books, heavy selling pressure has finally eliminated the alternate bullish running triangle interpretation for the Emini SP. The key area of critical support (1252.25) has been decisively broken leaving only bearish interpretations.

While today's close was fulfilling , in that the 2007-2011 analogy continues to provide a road map for anticipating where the market is headed, I would be remiss to inform readers that post pattern behavior is really important. The following chart is one of the two bearish interpretations. Where w.e actually ended is not locked in as of yet but it's really not required for the discussion below. What is, is the break of the lower boundary line and w.d.  

What I mean by post pattern behavior is that price has just broken out of a triangle and subsequent price action should confirm the pattern i.e. prices should swiftly decline in a thrusting manner with a minimum measured move in length equal to the widest length of the triangle (w.A). That would imply 1219.25 yet further potential exists to 1166.75 if you're viewing the pattern as a classical H&S. Should price action not react as the pattern implies, then something may be wrong with the analysis or the count itself.

Keep in mind that trading is like playing pool. If you've ever watch great pool players, they set up the table for their next shot. That's what we're doing now. First confirming that the analysis is right, then aligning with the trend.  In the coming days we'll eventually see a counter trend move that should be a great set up to ride the trend in the largest move down.

Tomorrow we have the jobs report. Given the dreadful economic news of late, a bad report could cause more technical damage to the market. We'll see what happens.

Best of Trading

  

The Market Pulse

Tonight's blog post will be a brief follow up to my lengthy weekend video. As I begin this post, the House has voted favorable for the raising of the debt ceiling and the market reaction is muted.

Essentially, the table has been set. We know the levels... bearish below 1252.25 and bullish above 1352.75.

Looking back on today's wild ride, the bullish move was called for in the weekend video. My intraday levels for the retracement were 1307.5 - 1321.25 (not shown on chart). In the ON session, prices actually reached beyond the first target to 1309.5 before failing.  Once the daily session began, within the first five minutes of trade, the market had gapped up to 1304.75 and then proceeded to lose all bullish momentum. It fell hard in response to a poor ISM number, as fear of a double dip recession are starting to emerge... or was it also that the the market hit a wall at the 50 sma that even I missed?

Even though the market closed off the lows, price is now below the 200 sma. As I stated in my weekend video, " institutional investors may not be willing to defend their positions". Tomorrow will be a defining moment for them. What they do will certainly influence trade in either direction.

I can make a case that we made five completed waves in today's session but I need to see tomorrow's trade to more accurately determine how today's move fits into the larger wave pattern. I'll update readers with my thoughts as soon as I am able to draw a high confidence conclusion. Until then look up in a three wave affair to typical .5 - .618 retracement levels.


Best of Trading