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AM Update

January 31, 2012 By Leave a Comment

Traders, I’m sure you are aware of the risk -off tone for the markets so far today.  The moves in the markets have resulted after the disappointing economic data this morning, which was the Chicago PMI that came in much lower than expected.  Many might be wondering if the bears have resumed control or if this is this just a temporary move.  Looking at the AUDUUSD and SPX charts, we believe the wave counts are suggesting that this is just a correction.

The market “feel” was pretty bearish yesterday and so far today, but when we put that in the context of the higher time frames of just one larger degree, it has been nothing more than a buying opportunity in the longer-term uptrend.

It is interesting to note that the USD Index and the S&P has so far this year in 2012 flirted with the idea of breaking the 3+ year inverse correlation to trade side by side.  As a result, the correlations that the markets have grown accustomed to were set aside and the price dynamics were tepid at best.  Then about half way through this month we saw that short-lived divergence snap and the inverse relationship has re-emerged.

 

AUDUSD and SPX – Price action may have found support to push higher for the days and weeks ahead.

EURGBP – The ending diagonal that we have forecasted has been broken to the downside with plenty of room to continue to fall.

EURNZD – Price action appears to be on the ledge of a major drop off.

 

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Market Report – Update – 1.29.2012

January 29, 2012 By Leave a Comment

Another interesting week ahead of us after the US Fed decided to maintain its very easy monetary policy of low-interest rates and potentially more quantitative easing.  These actions are likely going to hurt the buck and support equities for the next several weeks and months ahead.  The USD index is likely going to tell the story for the markets as we expect weakness to return to being the theme.  As we look at the different markets in this report, it seems that another push in risk-on sentiment is likely to continue to unfold.

The DX seems to be in a wave (3) move lower which should continue to see strong selling pressure to keep the index heavy this week.  Many analysts are looking for a rebound in price action, but we simply do not see that anytime soon for any significant rally.

DX 1Hour Candle chart

 

The S&P 500 appears that it may have another small wave lower to find support at about 1307 for minor wave 4 in the near term, but our focus is for price action to continue higher this week.

SPX 1Hour Candle chart

 

Crude oil hasn’t done much in recent weeks and has pretty much gone sideways since mid-November.  We expect price action to break out to the upside soon with a shorter term target of $115, which should be boosted by a lower USD.

CL 4Hour Candle chart

 

Our favorite risk-on currency continues to be the AUDUSD, so if we are bullish on equities then we continue to like price action here to continue higher.  Our wave count confirms our bias.

AUDUSD 1Hour Candle chart

 

Another interesting currency play is the EURNZD.  Instead of trading the EURUSD, we like a short EURNZD position with our expectation that the Euro will continue to have its troubles, but it would be far better to be short the Euro against the stronger New Zealand Dollar, which is setting up for a big move lower.

EURNZD 1Hour Candle chart

 

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Market Report – 1.29.2012

January 29, 2012 By Leave a Comment

A common method of analysis that we use here at Market Overflow is an inter-market analysis to help us understand how equities are performing relative to the currencies.  Our chart allows us to determine if the risk-on trade is being confirmed by the currencies, which seems to be clearly seen below.  The 30 day 1hour chart shows us that the S&P500 futures are up 7.58%, and the strongest USD related currencies are the NZDUSD and AUDUSD, which is why we have been trading the AUDUSD a lot recently with premium members.  The NZDUSD is up by about 8.55% and the AUDUSD is up by about 6.76% for the last 30 days.  We may begin to trade NZDUSD once we feel more confident in our wave count, but clearly we want to be long AUDUSD or the NZDUSD if we continue to believe that equities will continue to perform well.

 

ES(gray), AUDUSD(green), GBPUSD(red), NZDUSD(blue), EURUSD(pink) – 1hour line chart

 

For more chart coverage and more in-depth research and analysis, join our premium members content.  Also receive more interaction with Market Overflow as we provide Elliott Wave analysis and technical research to help your trading become more profitable.  If you have any questions contact Ben, Founder and Chief Analyst, at marketoverflow@gmail.com, or contact us here.  Try our free 7-day Premium content trial to experience our research and analysis service with trade recommendations.  If your are interested in the  **Free Premium Trial** contact us  here.

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Market Report – 1.22.2012

January 22, 2012 By Leave a Comment

The past several weeks have been a slow grind higher for the S&P 500, and it seems that we have been stuck in a “hurry up and wait” market.  The extended move higher is likely drawing in more and more long positions for the SPX, which is a case of traders being afraid of missing a move higher.  When traders begin to pile in a certain trading position, typically the market will shake those traders out.  Therefore, current levels are very dangerous for long positions as price action remains at a critical inflection point.  We have two different wave counts for the SPX, and it seems both would suggest a move lower soon.  A move lower would be in the form of the start of a larger move lower that would last several months, or it would be a smaller retracement setting up a continued move higher for the next several months.

The wave counts for several markets are not very clean, which likely means that we remain in corrective patterns.  These scenarios are difficult for traders, and typically cause traders to lose trading capital due to a lack of a tradable trend.  It makes a lot of sense to remain patient to wait for the higher probability trades.  Trading is a game of “where are my probabilities the best or better”.  Remember of course that the tendency for the markets is go higher, and on average the market goes higher.  Also it is important to note that Chinese equities may have based out in the short-term at minimum for a move higher, which could support the S&P 500 and Crude Oil.  The USD index continues to be a mess, and our conviction is to not buy the DX.  We actually prefer selling the DX at current levels.  Now to the charts.

Our current primary wave count for the SPX remains to be this first daily chart below.  The abc correction higher has pushed above the critical 1306 level with a very important trend line resistance just above current levels.  Currently the trend line comes in at about 1322-1324.  The trend line extends lower all the way back from the 10.11.2007 high.  A break above would be critical for the bulls and really hurt the bears.  It is important to recognize that this move higher is becoming overextended and overbought, therefore it is due for a pullback at minimum.  However, if this wave count is correct, once price action puts in a top we should see sharp price action lower very verry soon.  If we don’t get the sharp price action lower very soon, then we must shift to our alternate wave count.

SPX Daily Candle chart

 

Here is a look at our alternate wave count for the SPX.  It is a more bullish interpretation that expects more upside in the near term.  The evidence across the markets is pushing us more and more to this interpretation, especially if we don’t get a sell-off very soon.

SPX Daily Candle chart

 

The TNX has failed to break below 18, which likely points to higher levels in the near term.  We expect that price action may create an abcde triangle for wave iv over the next couple months.

TNX Daily Candle chart

 

Copper continues to look very choppy and may have higher levels ahead to complete the corrective wave (b).

HG Daily Candle chart

 

Crude oil has continued its holding pattern, but we believe a wave 3 break out to the upside is very near.  This expectation is part of what has us leaning more and more towards a bullish SPX for the months ahead.  Price action should find good support at the 98.37 and 97.35 levels, where we believe it’s a buy.

CL Daily Candle chart

 

The AUDUSD continues to be one of our favored wave counts that we have continued to track.  We expect price action to complete wave (1) soon, and then retrace lower for wave (2).  This wave count is very bullish for the AUDUSD, which likely means that the SPX is headed higher.  We will be looking to enter a long position soon, if price action plays accordingly.

AUDUSD 4Hour Candle chart

 

Apple is pulling back for a buy opportunity soon, which is another bullish indicator for the markets.

AAPL 4Hour Candle chart

 

For more chart coverage and more in-depth research and analysis, join our premium members content.  Also receive more interaction with Market Overflow as we provide Elliott Wave analysis and technical research to help your trading become more profitable.  If you have any questions contact Ben, Founder and Chief Analyst, at marketoverflow@gmail.com, or contact us here.  Try our free 7-day Premium content trial to experience our research and analysis service with trade recommendations.  If your are interested in the  **Free Premium Trial** contact us  here.

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Market Report – 1.18.2012

January 18, 2012 By Leave a Comment

The following is a post of Premium content that has been made available to guests.  This is an example of what our Premium members receive several times each day.

 

The SPX may have another push higher to complete many waves as indicated in the chart.  We may be looking at a very important top.  The rally seems to be on borrowed time, especially as we evaluated the entire market landscape.

SPX 1Hour Candle chart

 

The TNX gave back all of its early gains yesterday, which is a signal of a continued risk off tone for the market.  With the “safe haven” buying of treasuries and the S&P 500 running out of gas yesterday, it seems that a major risk off move could come at any time and may be getting underway now.  We see the TNX as making another move lower the 15 level at a minimum, which is what we have been forecasting for months now.

TNX 4Hour Candle chart

 

Copper has moved higher in corrective fashion and has hit up against some stiff resistance at 3.75.  This could be the end of wave (iv) for another push lower, which would be bearish for the economy.

HG 4Hour Candle chart

 

Crude oil continues to flirt with a 2-month old trend line that has acted as support and resistance.  If price action breaks down again through the supportive trend line, we may be seeing the beginning of a big move to the downside.

CL 4Hour Candle chart

 

A very important long-term trend line has capped the move higher for the AUDUSD, which prevent the “risk on” tone from advancing.  A failure to break above would mean that we could see a very sizeable move to the downside develop soon.

AUDUSD 4Hour Candle chart

 

For more chart coverage and more in-depth research and analysis, join our premium members content.  Also receive more interaction with Market Overflow as we provide Elliott Wave analysis and technical research to help your trading/investing become more profitable.  If you have any questions contact Ben, Founder and Chief Analyst, at marketoverflow@gmail.com, or contact us here.  We do have a free 7-day Premium content trial to try out research and analysis service with trade recommendations.  If your are interested in the  **Free Premium Trial** contact us  here.

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Market Report – 1.11.2012

January 11, 2012 By Leave a Comment

The following is a post of Premium content that has been made available to guests.  This is an example of what our Premium members receive several times each day.

The SPX inched closer to our inflection point and price action appears very tentative.  A break below the upward trend channel could get a very bearish move started.

SPX 4Hour Candle chart

 

The AUDUSD is a chart that we have been watching closely with traders and have traded.  If price action finds support we could see another upside push.

AUDUSD 30min Candle chart

 

Gold appears ready for another drop to lower levels.  We put a trade on this morning.

GC 4Hour Candle chart

 

For more chart coverage and more in-depth research and analysis, join our premium members content.  Also receive more interaction with Market Overflow as we provide Elliott Wave analysis and technical research to help your trading/investing become more profitable.  If you have any questions contact Ben, Founder and Chief Analyst, at marketoverflow@gmail.com, or contact us here.

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SPX

January 9, 2012 By Leave a Comment

The SPX is set to test the 1300 level to clear buy stops.  This is our most bearish count show here, but we have to wonder if the upside will be limited to the 1310 area based upon our very bullish AUDUSD wave count.

 

SPX 4Hour Candle chart

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Market Report – 1.8.2011

January 8, 2012 By Leave a Comment

The following is a post of Premium content that has been made available to guests.  This is an example of what our Premium members receive several times each day.

The markets are at very critical inflection point.  The US NFP data showed an improvement of 200,000 jobs, however equities had a difficult time rallying on the news.  It makes us believe that the positive data was already baked into the markets.  The data was expected to be positive, but the number was still a surprise to the upside according to projections.  Is the SPX running out of steam now?  There continues to be an increasing amount of bullish perspectives for equities, which likely provides us a contrarian signal to be aware of a potential top for the SPX.  We continue to believe it could be a significant top for the next couple years.

SPX Daily Candle chart

 

Many analysts have a more bullish perspective, which is fair to say.  We believe it is critical to have an inter-market perspective, therefore, we want to analyze other markets to confirm our bias.  We have continued to watch the AUDUSD for quite some time and believe that it could offer us a clue about the direction of the SPX.

Here is a look at a 1 hour candle chart for the AUDUSD, which is a bearish wave count.  If this wave count is correct then we should see our SPX wave count above confirmed in the weeks ahead.  The chart displays a 1-2 bearish move lower with a wave 3 currently dropping to lower levels.  The main resistance level is 1.0387 on a move higher, which is also our invalidation level.  Support areas on a continued move lower are currently at the 1.0174 level, which is the 61.8% fib retracement, and also there is trend line resistance that has now become support currently at about the 1.0131 level.  Our confidence in the wave count will increase with price action moving below the 1.0042 level.  A move below 0.9858 will confirm this wave count.  If this wave count is confirmed we should also see the SPX selling off significantly without much more upside at all.

AUDUSD 1Hour Candle chart

 

Here is another look at a 1 hour candle chart of the AUDUSD, which is a bullish wave count.  If this wave count is correct then we should see more upside for the SPX in the weeks ahead.  The chart displays 1-2, 1-2 Elliott Wave count, which expects price action to make a move to the upside once the correction is completed for wave 2.  Support areas are currently at the 1.0174 level which is the 61.8% fib retracement, and also there is trend line resistance that has now become support that is currently at about the 1.0131 level.  This wave count will be invalidated with price action moving below the 1.0044 level.  A move above 1.0387 will confirm this wave count.

AUDUSD 1Hour Candle chart

 

For more chart coverage and more in-depth research and analysis, join our premium members content.  Also receive more interaction with Market Overflow as we provide Elliott Wave analysis and technical research to help your trading/investing become more profitable.  If you have any questions contact Ben, Founder and Chief Analyst, at marketoverflow@gmail.com, or contact us here.

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Premium Content Trade Performance

January 2, 2012 By Leave a Comment

Our Premium content was launched during the third week of November, and we had a very successful month and a half of trading for our recommended trades.  We had 11 winning trades, 1 losing trade, and currently one open trade that we are carrying over from last year.  You can view our Premium trade performance here.

In summary we had 9 forex trades, which all of them were the AUDUSD.  We don’t normally trade just one currency pair, but it just happened to be in November and December that the AUDUSD was the best choice for risk/reward trade setups and it also had the best wave recognition.  There were 8 of those that were winning trades and 1 that was a losing trade.  We averaged a gain of 78.61 pips per forex trade, which is excellent.  Our only losing trade was 4 pips, which is also very good.  Also we had 3 equity index trades, which all of them were the SPX.  Again we don’t normally only trade the SPX for equities, but it was one of the best in terms of Elliott Wave pattern recognition.  All of our 3 SPX trades that we closed this afternoon were winning trades.  We averaged a gain of 10.83 per SPX trade, which was pretty good.

All in all for 6 weeks of Premium trade recommendations, we did very well.  There were likely many of the Premium members that had more trades based upon our analysis during the last 6 months, which could have been based on our Market Reports or our Premium content that wasn’t official trade recommendations.

I do want to emphasize that forex is a very efficient way to trade, and it is evident in our trade performance.  There is plenty of volatility in the forex markets and they move decisively.  You are always able to view our Trade Performance page on the right hand side of our main home webpage of www.marketoverflow.com, however, only Premium members are able to view our Open Positions & Orders page.

We wish you all the best as 2012 gets underway.

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