While the wave structure in the current rebound is unclear, what is clear is that the market is showing strength. This is also evidenced by the performance of Financials & Transports - they've been leading the charge so far. It does not mean one should be going long(unless one is a daytrader), as the market is still very much overbought.
Yesterday's sideways action did relieve the excess on the 5-min chart, opening the possibility of at least one more spike higher. Any selling at the open should be absorbed by the 1133 level, which is now horizontal support(black) as well as trendline support(red&blue). IMHO, we will turn higher from there to set up a bigger reversal later this week or next. One of my earlier posts posited a target of around 1153 based on W-X-Y. That looks more likely now. Will post again once we get there, if we get there!
Meanwhile, i'm gonna sit on my hands, and wait for at least one negative divergence on the dailies, or a reversal bar before taking action.
All the best!
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2 comments:
Do you think gold gives any clues to market direction? Any thoughts to when gold will de-couple from stocks?
Hi Bob!
Gold is a difficult market to analyse in terms of correlations. Most times, it works negatively with the dollar (inflation hedge), sometimes befriends stocks, and then goes to bed with crude oil.
Generally, i like to look at it as a crisis hedge in uncertain times. Other than short-term movements, it is really hard to figure out its direction.
So, my apologies can't really help with that question. :)
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