The week before us is really difficult to call because of important data releases and statements from two major central banks. Anything could happen.
But among the three high priests of EW theory I follow, most believe we experienced a negligible correction and are now in the fifth wave leading to a minor 5, a major III or something similar.
2175/2176 proved to be an obstacle for the reason noted on the chart and the market, seemingly, corrected through time rather than price although we did see a minor pullback on Thursday after tagging 2175.63 on Wednesday.
While skeptical, I will reluctantly believe it once we convincingly clear 2177………a major EW pivot derived from the highs of this year and the lows of last year. And 2186 appears as an obstacle as well.
Assuming these levels are taken out, the next target area ranges from 2202 to 2225, the latter a round determined by the channel line.
And within this range, three numbers are of notable interest: 2206, 2212 and 2221. Plus, 2200 should be a psychological resistance level as well.
I think the market is extended for a host of reasons including the belief among analysts who now expect Q3 earnings will decline, making for six consecutive quarterly declines in earnings while global economic uncertainty is rising.
But as long as central banks increase the pool of liquidity and incremental increases find their way into the market, my concerns are literally wiped off the radar screen.
The ECB this past week disappointed on Thursday and the G20 statement issued today is long on words but short on concrete measures, making the Fed Announcement on Wednesday and BOJ statement Friday significant events for an uncertain and liquidity driven market.
Kommentarer
Kiggan
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but its going up on low volume so what do u have to say about thaT?
Quantum_Maryland_Capital
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Fewer players with less conviction.
Kiggan
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then its most likely to go bearish..?
Quantum_Maryland_Capital
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For sure but when and at what price? This could continue for some time before we have a sizable correction precisely because of low volume. In this environment, its easy for the bulls to hold their positions. On the other hand, a big chunk of bad news might send it lower. Its a tough market and even tougher to identify where it might correct.