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Tuesday, February 14, 2017

Market Update - Technical Tuesday 2/14/2017

Was going to call this update "Market tops out", in wave (iii), of iii, of 5. That's not a prediction, but what I'm seeing on the 30 min Dow chart below.

The broader market rallied, ahead of Yellen's testimony (today), which squeezed any retail short sellers who may have sold into Friday's close. Of course the bulls are going to pile on as usual.

Selling into a weekend, is always risky, because money is put to work on Mondays'. That's why we call it "mutual fund Monday". Sometimes you see capitulation on a Friday (in a bear market), and you're forced to make that call, but it's never comfortable selling into that kind of strength.

I don't see any other catalyst for yesterday's move higher, but one of my hard and fast ruled is, "never under-estimate the power of a wave 3". If memory serves you can find that quote in my free Elliott Wave Tutorial, linked in the side menu.  

Dow broke the 5 min chart, and even took out the thin blue line on my 30 min chart, but reversed at my red line. Futures looked flat last I checked, but we could make another run at that red line, before reversing. Don't sweat the small stuff.

Alternatively you could call yesterday's rally the 3rd move up, so it must be wave 5 of 5, but you would probably be wrong. I'm still expecting consolidation in sub minuette wave (((iv))) of iii ahead of OPEX. These are tiny moves, but I'd at least expect to give back all of yesterday's gains, before retesting yesterday's highs in wave (((v))) of iii of 5,  maybe on OPEX, or next week.

Oil sold off, which seemed to come as a surprise to some, and $SOX rallied, so I'm going to call yesterday's mostly correct, even though I tend to be pessimistic. Even when I get it 100% right I don't do the snoopy dance in my living room. I try to separate emotion from the trade.    

This update could go on for 2 more pages, but the opening bell rings in 10 minutes.

Today traders will be watching Janet Yellen's testimony, and I think I'll even try to suffer through it.
If she says something stupid to sabotage the Trump administration, watch for Gold and REITS to tank. These 2 tern to move in lock step with interest rates.


If on the other hand Yellen goes the other way, downplaying any further interests rate hike, watch for banks to tank.

Take care, and watch for anything out of the normal, to be addressed in my twitter feed.

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