Posted this a while back before we bottomed in Oct ober. The crazy rally that has followed as Large Cap, Mega Cap, and Dividend plays have all gone straight up is keeping the indices afloat, but there are warning signs all around still. This is the last leg up, the problem is who knows how crazy it gets. The past few days have been mild and look very "top-ish" to me.
Given the recent volatility in the market I think we are at the 4th wave of a 5 wave correction that should end next week, before we get a sharp rebound back to .618 of the move to end a larger Wave #1 around the1945's in what I expect to be a big correction down to the 1,550 level in the S&P500 as part of a 3rd Wave down. If by chance we rally past 1945 level I...
Amazon announced it plans to open a brick and mortar store in NY and we should all be hoping it is just for show! The stock looks poised for a nice drop after rallying to 61.8 fib extension in its last move down and has now broken a upward sloping trend line and re-tested it. Until this company can show earnings I think buyers have dried up at these prices and...
Everything is against being long this market currently:
Divergence in credit
Small Caps rolling over
MACD divergence
Oil headed lower
Rates headed Lower
Fed worried about economic growth
Currency devaluation around world keeping dollar strong
Buybacks only thing keeping EPS inline
Alcoa has become extended and been a great trade that I took part in from 2013, but I don't thin there is much upside left. Given the Fibonacci extensions and inability to break the 50dma after-hours given 3Q earnings I think we are simply seeing a re-test of a broken trend line and setting up for a move lower. I would not be surprised to see a "sell the news"...
The release of pending news on October 9th has the stock rebounding, but it is stalling at a broken trend line where I think we will see it sell off after the news release back down to a minimum of the $220 range. Buying at theses prices seems illogical given the market cap and fact that they are not a profitable company if you remove the selling of emission...
We have hit a top in what is either an extended 3rd wave to 2.618 extension or a wave 5 and are now setting up for a big down move. Whichever is the case I think we will see the 1650 area on the S&P500 tested soon. There has been strong divergence in MACD since the end of a possible 1.618 3rd wave, which is typical for a 5th wave scenario. You also have the RSI...
Visa looks ready for a big move down as I see the next wave of selling taking it to 160ish and possibly lower. The company has been buying up to 5 billion worth of stock back with 1.9bn left after the June quarter. Given the stock has not been able to make new highs even with the aid of a buyback, I see very little upside. You also have the NYSE which is sitting...
IWM has had a great run from 2009 low and now looks ripe for a technical breakdown. Looking at the setup today it is very reminiscent of 2011 when the IWM corrected over 10%. Looking at where the RSI and MACD currently sits some might believe they need a bounce to gain momentum to downside, but there is strong divergence in MACD and RSI sits at the same levels...
