Monday, January 5, 2009

Update

Not much of a sell off, that’s saying that there is more to wave ‘c’ up once the oscillators are satisfied.

Below is a 5 day, 5 minute chart of the DOW. Note the 4 day uptrend channel and how we broke beneath it, regained it, and broke again. Here I’ve labeled a very simple Elliott Wave count. I expect that once wave ‘c’ completes here we will probably head higher. I’m not sure what level this count is on, it could be that what I have labeled as 5 is really 3, we won’t know until later – that’s one of the problems with EW, it’s sometimes very difficult to know exactly what comes next, but the count will be more obvious in hind sight. Again, because I’m not certain, I keep my plays small here.



Next is a 20 day, 30 minute chart of the DOW. Note that the fast stochastic is heading for, but has not reached oversold, which is my sell my short signal. It’s possible that it never reaches oversold, and it’s also possible that once it does that there’s more decline still to come. My philosophy here is to attempt to cream the middle of the move, if possible, this doesn’t look like it’s going to be that much of a move and we’re in an intermediate up trend. I also note that the 60 minute stochastic is barely out of overbought and that both slow indicators have a long ways to go.



Finally, here’s a 10 minute chart of the SPX which is more bullish looking than the DOW. Note the uptrend line has not been broken and that the 10 minute fast stochastic has made a complete round trip to the bottom already this morning.



Gold and silver are getting killed on a stronger dollar, the NDX and RUT are both down less than .5%, and do not look that bearish either.

Bonds are continuing their correction, that indicates that money is flowing out which could be helping equities.

The VIX opened up pretty strong, made a run at 40, but was stopped cold there and sank back down, now at about 39. As I mentioned in my VIX analysis article, VIX Analysis, I thought it would find support in the mid 30’s and so far it has for now.

Overall fairly bullish looking to me, as I’ve been typing the SPX just turned positive again. I don’t see us taking off like a rocket, but the more these oscillators work off overbought, the more likely a run higher becomes, but again, if you look at the 60 minute slow stochastic, it’s tired and needs a rest!