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Tuesday, July 16, 2019

Market Update 7/16/2019 - Long Term View

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My long term outlook

Today I want to look at some longer term charts, not available in the public charts area.

Looking at the DOW chart below you can see what looks like a broadening, or "expanding triangle pattern" (in black). This pattern is also referred to as a megaphone pattern.

This is one of my favorite patterns, and the one what most bears are defiantly watching.

Looks like the price action pierced the upper pattern line (at the 27,300 level), which doesn't rule out the pattern, in fact it's common for the price action to extend (whipsaw) beyond the boundaries of this type of pattern, or throw over the top of the pattern in wave 5.

This pattern definitely has some traders confused, and down-right scared, and that's evidenced by the way they came in an sold yesterday's open, but most traders are short sighted, and don't understand cyclical markets, let alone Elliott Wave Theory. It would be very odd to see the market sell-off on low summer volume, going into earnings, ahead of a dovish (The) Fed.

Next Chart

The chart below shows the Dow in another megaphone pattern, getting ready to take out the target I set weeks ago, and if I had access to my twitter, I'd embed one of my tweets from around June 1st, where I called the bottom on this market, precisely.

So the market is beginning to look a little toppy, but see the annotations I placed on the chart. This could hold up for a while, build a base above my pink line, and retest the highs weeks from now.
If the first pattern was correct then we could see the price action reverse and whipsaw back to the bottom of the range, but that seems highly unlikely. What's more likely is the market continues to hold up, and retest the highs, going into earning season, and the, The Fed Announcement. I think there's a good chance that's going to be a sell the news event, and an excuse for the bulls to take some profits.  

In the meantime, check out the Russell 2000 $RUT chart I added to the public charts area, yesterday.
Looks like we could see a sector rotation into the $RUT. Not really sure which sector money might come out of, at the moment, but you probably shouldn't be selling a dull market anyhow.

If market conditions change, and the long term chart break, then we'll have to regroup, but until then, enjoy the summer.


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