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Saturday, January 8, 2011

Week-end Observations!!!

Roy over at the Elliott Wave Practitioner must of got up early this morning and consumed a few extra cups of coffee before making this MUST watch video, he goes into detail on the Dow, with a solid line in the sand at $11,531, which at this point things get very bearish, he starts the clip off with some great general comments about the markets, you can view this clip by Clicking here!!!

I have been watching the European markets for the last couple of weeks, because their markets have not been showing the same enthusiasm as the US markets have experienced over the last few months. Weakness in these markets are early warning signs that the US equities market could be effected and now that these European markets are close to breaking down, bulls need to take warning and watch what happens overseas next week.
Here is the updated chart of Spain's $IBEX that I showed yesterday during trading hours, left sitting right on an important trendline of support after closing down 1.46%, there is no room left on the downside come next week, it is Do or Die time. On the Elliott wave front, I see no possible way to label the rally from the July '10 lows as impulsive, and if this support gives way, so does the bullish channel, leaving the only channel that is being respected, a bearish channel.
Italy's $MIB (Milan Index) is in worse shape then Spain's, having already broke down and out of the bullish channel and currently hitting solid resistance from three points, a long term bearish upper channel line(green), back-testing the lower bullish channel line(green) and the brown bearish minor median channel line(brown). There are some interesting lines on this chart, and the majority have been well respected, upping the resistance power of the crossing point of all three of these lines.
The Sell-off is also showing up in the Euro, with a fresh lower low being printed yesterday as the price broke below support of the previous low of $129.72 while keeping the downtrend channel intact, next support is now down at $125.91, reallying upping the odds, that the Spanish equities market will breakdown below that important level of support from the upper chart.

This chart is one of a few I use to find approaching tops and bottoms and then to confirm them, the "Percent of Stocks above their 50 day MA" is over-laid with a 20 day MA. Normally a cross of this average with the price action is a good indication that a top/bottom has been put in, also this chart helps to see when the SPX is reaching extreme over-bought/sold conditions that make the market ripe for a trend reversal. Yesterday's sell-off put the SPX right on the breaking point, and any follow-thru that holds into the close Monday would turn this chart bearish and suggest that the SPX is entering into a new down trend.
Next week could be VERY interesting for the markets, if the European Indexes continue to sell-off, that most likely will be the final straw that breaks the camel's back on the US equities market.
The weekly charts have been updated on the Trend Finder II.

A little something special for the week-end!!!!


  1. Great update. My Weekend Charts contribution:
    Here's to Europe!

  2. (Reuters) - It has so far been a rough 2011 for the euro and a respite next week will likely not occur given an avalanche of euro zone bond sales set to test the market's resolve.