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Jason Haver: Bears Take Control of the Short Term
The S&P and Dow charts indicate that bears have seized the short-term trend, but bulls have yet to relinquish the long term.
Jason Haver    

In the last update, I noted that the S&P 500 (INDEXSP:.INX) could be nearing a fourth wave correction, and it now appears that correction may be underway.  As of this exact moment, this is a market without clear intermediate trades, and personally I'm limiting my trades to short term only until lower-risk entries present themselves.  The SPX chart below helps illustrate why.  I don't want to get too far ahead of the price action, but not shown on the chart is the potential that the correction could retrace as deep as the 1870s -- that's not a prediction yet, just something to keep in mind.
 
 s and p 500 chart
Click to enlarge
 
We find a similar situation in the Dow Jones Industrial Average (INDEXDJX:.DJI), though here the current decline looks like it could be the c-wave of an expanded flat:
 

Click to enlarge
 
On the daily SPX chart, we can see price briefly overthrew long-term trend resistance (which I discussed in May), before falling back inside.  This is sticky territory for longs, as the price chart below reveals some similarity between the current pattern and the price action of late 2009 and early 2010, when SPX tested and established the upper channel boundary of the blue trend channel.  SPX overthrew the channel in that instance too, then ultimately fell back into a steep correction before moving higher again.

 
     Click to enlarge

In conclusion, while all indications are that we're still in a bull market, due to the market's proximity to long-term resistance, this may not be the most opportune place for intermediate longs.  If this is indeed a fourth wave correction, then it should eventually resolve with new highs -- but as of this moment, the short-term trend is down and momentum confirmed the recent lows, which means the edge goes to bears for lower prices over the short term. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @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: Bears Take Control of the Short Term
The S&P and Dow charts indicate that bears have seized the short-term trend, but bulls have yet to relinquish the long term.
Jason Haver    

In the last update, I noted that the S&P 500 (INDEXSP:.INX) could be nearing a fourth wave correction, and it now appears that correction may be underway.  As of this exact moment, this is a market without clear intermediate trades, and personally I'm limiting my trades to short term only until lower-risk entries present themselves.  The SPX chart below helps illustrate why.  I don't want to get too far ahead of the price action, but not shown on the chart is the potential that the correction could retrace as deep as the 1870s -- that's not a prediction yet, just something to keep in mind.
 
 s and p 500 chart
Click to enlarge
 
We find a similar situation in the Dow Jones Industrial Average (INDEXDJX:.DJI), though here the current decline looks like it could be the c-wave of an expanded flat:
 

Click to enlarge
 
On the daily SPX chart, we can see price briefly overthrew long-term trend resistance (which I discussed in May), before falling back inside.  This is sticky territory for longs, as the price chart below reveals some similarity between the current pattern and the price action of late 2009 and early 2010, when SPX tested and established the upper channel boundary of the blue trend channel.  SPX overthrew the channel in that instance too, then ultimately fell back into a steep correction before moving higher again.

 
     Click to enlarge

In conclusion, while all indications are that we're still in a bull market, due to the market's proximity to long-term resistance, this may not be the most opportune place for intermediate longs.  If this is indeed a fourth wave correction, then it should eventually resolve with new highs -- but as of this moment, the short-term trend is down and momentum confirmed the recent lows, which means the edge goes to bears for lower prices over the short term. Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of it: @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: Bears Take Control of the Short Term
The S&P and Dow charts indicate that bears have seized the short-term trend, but bulls have yet to relinquish the long term.
Jason Haver    

In the last update, I noted that the S&P 500 (INDEXSP:.INX) could be nearing a fourth wave correction, and it now appears that correction may be underway.  As of this exact moment, this is a market without clear intermediate trades, and personally I'm limiting my trades to short term only until lower-risk entries present themselves.  The SPX chart below helps illustrate why.  I don't want to get too far ahead of the price action, but not shown on the chart is the potential that the correction could retrace as deep as the 1870s -- that's not a prediction yet, just something to keep in mind.
 
 s and p 500 chart
Click to enlarge
 
We find a similar situation in the Dow Jones Industrial Average (INDEXDJX:.DJI), though here the current decline looks like it could be the c-wave of an expanded flat:
 

Click to enlarge
 
On the daily SPX chart, we can see price briefly overthrew long-term trend resistance (which I discussed in May), before falling back inside.  This is sticky territory for longs, as the price chart below reveals some similarity between the current pattern and the price action of late 2009 and early 2010, when SPX tested and established the upper channel boundary of the blue trend channel.  SPX overthrew the channel in that instance too, then ultimately fell back into a steep correction before moving higher again.

 
     Click to enlarge

In conclusion, while all indications are that we're still in a bull market, due to the market's proximity to long-term resistance, this may not be the most opportune place for intermediate longs.  If this is indeed a fourth wave correction, then it should eventually resolve with new highs -- but as of this moment, the short-term trend is down and momentum confirmed the recent lows, which means the edge goes to bears for lower prices over the short term. Trade safe.

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