Market update

31.50 – 32.00 looks to be tested soon, if that can hold then the impulsive count still has legs, if not, we’re looking at C wave of the corrective alternative count being finished already.   Which would label the current action as an X wave, larger B wave, or resumption of the larger trend down.  Elliott Wave is merely a labeling system that allows you to interpret price action and envision possibilities.  Stop loss protection is your only ally against selection bias (selecting a pattern that corroborates previously held believes) and other detriments to correct analysis.  We are badly overbought, classic stochastic style indicators have reached the high points of their range.  However, most bull markets and large rallies begin with an early overbough condition.  In fact, in great rallies, it is the public’s perception that “it cannot go any higher” that requires markets to head to higher prices, until they are finally convinced to buy in at the  real point that itcannot go any higher.  Polling (if accurate), indicates that the people are willing to believe in the current administration’s plan, but whether they will “put their money where their mouth is” remains to be seen.  I want to see how the $VIX reacts at a 40 retest, as it appears to be falling through previous support at that region. Sentiment and implied volatility should clarify the situation, but they are only a piece of the puzzle.  If enough supportive money was created via the stimulus package and other means, then sentiment, reality, and other precedents simply won’t matter.  We may be in another period where everything appears to be sound on the surface, while our currency erodes further and real wages continue to fall.  Presidential policy appears to be in line with such re-inflational policies.  Commodity prices should also shed some light as to whether reflation is occurring.  This of course would only delay the inevitable structural inequalities in our system, but as always, it sure would be fun!  Happy trading, here’s a chart of the $VIX.

current QQQQ inflection zone = 31.50-32.00 

9:16 AM