US indices elliott wave update

DAX: Elliott wave analysis
May 28, 2013
US indices hold support levels
May 30, 2013

US indices as per our analysis bounced upwards in what we called wave C. Our expectation was to see US indices retrace the 61.8% of the downward move. The upward bounce was stronger and reached past the 76.4% retracement. However the wave count we preferred would only be canceled if prices exceeded the start of what we call wave A or 1. Our favorite wave count implies that we have started a downward correction. The first two parts of the downward correction we believe have been completed and yesterday we started the next leg down. We believe that the decline from the all time highs was just wave A, the upward bounce wave B and we should expect to make new lows as wave C. Many however promote the scenario that markets have made an important top at the recent all time highs and new longer term wave down has started. Personally I don’t care which scenario comes true as long as I follow the trend and make profitable trades.

DOW:

Below you see our Elliott wave count for DOW and I expect at least the recent lows to be tested soon if not broken.

dow60m

S&P:

Below is our wave count for S&P and as you can see here also the view is the same is with DOW. We believe that the short term trend will change to down as soon as 1650 and 1636 levels are broken downwards.

spx10

Our bigger picture sees support at the 1620-1600 level where we think this downward correction will most probably end. Until then we remain short biased and we always take into consideration the form of the price action as it will show us the future direction and where the trend is.

As always, thank you for taking the time to catch up on my thinking.

impulse-wave-rules

A term used to describe a trader (bear) who is expects that a particular asset – be it a commodity, currency or product – to fall in value. The opposite of a ‘bull’.

The idea is that bears attack by getting up on their hind legs and striking their opponents down with their paws, symbolising the fact that they are sellers driving prices down.

Beliefs held by the aforementioned ‘bears’ of the trading world, are described as bearish. Characterised by a generally pessimistic outlook on the state of a given asset, a bearish outlook would suggest that a fall in value is imminent. Opposite of bullish.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.