Current Orientation on U.S. Stocks
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Financial Market Technical Analysis
Elliott Wave :: Intermediate and Long Term Swing Trading
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Since making a correction low on February 3rd, U.S. stock markets have seen a nice 5 day rally off of support and from a downside extended technical condition. My overall take is that the markets have just seen the start of a 5th wave of a sequence that started in June-August 2012 with a maximum upside potential of SPX 1900. In either case, I see limited upside and lots of downside potential in US equities over the next 1-4 months. The risk/reward is not very favorable for longs, particularly in comparison to the Precious Metals sector, which offered traders a very nice, high probability, low risk/high reward setup. While I have been recommending long positions in Precious Metals trading vehicles since late December 2013, I would not recommend short positions in US stocks. Longer term traders and investors would probably be better served by holding through any corrective volatility. The correction could easily take the shape of a triangle or running triangle such that deeper technical correction occurs with relatively little price correction.
When and if a new high is made, there is a strong likelihood of bearish technical divergences on the daily, weekly and monthly charts. When such bear divergences are coupled that with good arguments for a completed 5 wave sequence and a number of significant trendline breaks, risk predominates over reward. In addition, we are seeing significant turns in traditionally "risk off" markets such as Bonds and Precious Metals. While in my view these markets are still in long term bear phases, it does appear that they are in the process of correcting their initial declines and such behavior could very well correlate with a corrective period for stocks. If I were still long stocks, I'd probably exit into new highs made over the next couple of weeks.
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Since making a correction low on February 3rd, U.S. stock markets have seen a nice 5 day rally off of support and from a downside extended technical condition. My overall take is that the markets have just seen the start of a 5th wave of a sequence that started in November 2012 with a maximum upside potential of SPX 1900. I see limited upside and lots of downside potential in US equities over the next 1-4 months. The risk/reward is not very favorable for longs, particularly in comparison…Continue
Since the last BullBear Market Report, the US equities markets have undergone a Wave 2 correction of the first move in a new, primary, secular bull market that began in November 2012. While I continued to maintain a long term bullish orientation, the period since the May top produced a set of technical readings which strongly resembled conditions present at the 2007 and 2011 tops. I remained open to the possibility that a new cyclical bear market began in May but I continued to warn that if…Continue
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Yeats, "The Second Coming"
From late 2012 I have been gradually layering and developing the thesis that a secular bull market started in November of 2012 (with a possible…Continue
This morning, leading retailer Kohls Corp (NYSE:KSS) is coming under some selling pressure. The popular retailer is falling lower by 0.76 cents to $55.13 a share. Short term day traders should keep…Continue
I receive many unsolicited comments from appreciative BullBear Traders. I really do work very hard to "keep you on the right side of the markets" so it makes my day to receive such kind, sincere…Continue
One of the best performing industry groups in 2013 has been the airline stocks. The consolidation in the sector has certainly helped the airline stocks rally throughout last year. Recently, the…Continue