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Jason Haver: Intermediate Upside Potential in SPX Still Appears Limited
The wave counts suggest limited upside potential, and indicators are beginning to generate top signals.
Jason Haver    

Markets like this can make it a challenge to keep the updates interesting and not overly repetitive, redundant, and redundant. There's very little to add on a material level -- in fact, I considered simply republishing the last update, but I accidentally spilled coffee on it.

Big picture, the S&P 500 (INDEXSP:.INX) still appears to have fairly limited upside potential. In Elliott Wave Theory, five waves form a complete fractal, at which point a trend reversal becomes higher probability.


Click to enlarge

The near-term is ambiguous -- if the bear count is in play, then the top is probably in. If the market is going to form five waves up for the fifth and final wave at higher degree, then it needs another small wave up. At higher degree, both counts are basically bear counts, since the wave patterns suggest upside is limited. From a classic TA perspective, that expectation may not fit with the potential cup-and-handle double-reverse v-bottom "papa bear, my soup is too hot" pattern, as it's sometimes called (when I'm trying to keep the updates interesting, anyway). That pattern potentially targets 1900-1910 -- so if there's a breakout with increasing momentum, then the wave counts may need to be revisited. Presently I'm not anticipating that result, but any new signals would need to be respected as and if they occur.

There are two ways to view the current price action: Bulls would say SPX is consolidating the recent rally; bears would say SPX is retesting a resistance zone (the all-time high). Both descriptions are accurate, yet one of them is more correct -- pick your poison.


Click to enlarge

The Dow Jones Transportation Average (INDEXDJX:.DJI) Unexceptional and Mediocre required some minor adjustments after the expanded flat count found a bottom at the previously noted inflection point:


Click to enlarge

In conclusion, this market may to be trying to lull everyone to sleep. I'm suddenly reminded of an old cheesy and cliche movie line: "It's quiet out there. Too quiet." It seems like most everyone is expecting new highs at this point, but, personally, I have very little desire to buy SPX near the all-time high, and I'm starting to see topping signals appear on some of my indicators. Unless and until there's a convincing breakout, short -- or stand aside -- look like more reasonable positions to me. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Intermediate Upside Potential in SPX Still Appears Limited
The wave counts suggest limited upside potential, and indicators are beginning to generate top signals.
Jason Haver    

Markets like this can make it a challenge to keep the updates interesting and not overly repetitive, redundant, and redundant. There's very little to add on a material level -- in fact, I considered simply republishing the last update, but I accidentally spilled coffee on it.

Big picture, the S&P 500 (INDEXSP:.INX) still appears to have fairly limited upside potential. In Elliott Wave Theory, five waves form a complete fractal, at which point a trend reversal becomes higher probability.


Click to enlarge

The near-term is ambiguous -- if the bear count is in play, then the top is probably in. If the market is going to form five waves up for the fifth and final wave at higher degree, then it needs another small wave up. At higher degree, both counts are basically bear counts, since the wave patterns suggest upside is limited. From a classic TA perspective, that expectation may not fit with the potential cup-and-handle double-reverse v-bottom "papa bear, my soup is too hot" pattern, as it's sometimes called (when I'm trying to keep the updates interesting, anyway). That pattern potentially targets 1900-1910 -- so if there's a breakout with increasing momentum, then the wave counts may need to be revisited. Presently I'm not anticipating that result, but any new signals would need to be respected as and if they occur.

There are two ways to view the current price action: Bulls would say SPX is consolidating the recent rally; bears would say SPX is retesting a resistance zone (the all-time high). Both descriptions are accurate, yet one of them is more correct -- pick your poison.


Click to enlarge

The Dow Jones Transportation Average (INDEXDJX:.DJI) Unexceptional and Mediocre required some minor adjustments after the expanded flat count found a bottom at the previously noted inflection point:


Click to enlarge

In conclusion, this market may to be trying to lull everyone to sleep. I'm suddenly reminded of an old cheesy and cliche movie line: "It's quiet out there. Too quiet." It seems like most everyone is expecting new highs at this point, but, personally, I have very little desire to buy SPX near the all-time high, and I'm starting to see topping signals appear on some of my indicators. Unless and until there's a convincing breakout, short -- or stand aside -- look like more reasonable positions to me. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Jason Haver: Intermediate Upside Potential in SPX Still Appears Limited
The wave counts suggest limited upside potential, and indicators are beginning to generate top signals.
Jason Haver    

Markets like this can make it a challenge to keep the updates interesting and not overly repetitive, redundant, and redundant. There's very little to add on a material level -- in fact, I considered simply republishing the last update, but I accidentally spilled coffee on it.

Big picture, the S&P 500 (INDEXSP:.INX) still appears to have fairly limited upside potential. In Elliott Wave Theory, five waves form a complete fractal, at which point a trend reversal becomes higher probability.


Click to enlarge

The near-term is ambiguous -- if the bear count is in play, then the top is probably in. If the market is going to form five waves up for the fifth and final wave at higher degree, then it needs another small wave up. At higher degree, both counts are basically bear counts, since the wave patterns suggest upside is limited. From a classic TA perspective, that expectation may not fit with the potential cup-and-handle double-reverse v-bottom "papa bear, my soup is too hot" pattern, as it's sometimes called (when I'm trying to keep the updates interesting, anyway). That pattern potentially targets 1900-1910 -- so if there's a breakout with increasing momentum, then the wave counts may need to be revisited. Presently I'm not anticipating that result, but any new signals would need to be respected as and if they occur.

There are two ways to view the current price action: Bulls would say SPX is consolidating the recent rally; bears would say SPX is retesting a resistance zone (the all-time high). Both descriptions are accurate, yet one of them is more correct -- pick your poison.


Click to enlarge

The Dow Jones Transportation Average (INDEXDJX:.DJI) Unexceptional and Mediocre required some minor adjustments after the expanded flat count found a bottom at the previously noted inflection point:


Click to enlarge

In conclusion, this market may to be trying to lull everyone to sleep. I'm suddenly reminded of an old cheesy and cliche movie line: "It's quiet out there. Too quiet." It seems like most everyone is expecting new highs at this point, but, personally, I have very little desire to buy SPX near the all-time high, and I'm starting to see topping signals appear on some of my indicators. Unless and until there's a convincing breakout, short -- or stand aside -- look like more reasonable positions to me. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter: @PretzelLogic.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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