Stock Market Tops Look Like This

By: Enda Glynn | Wed, Dec 6, 2017
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November saw the largest inflow into stocks in the index's history, surging the index to a new all time high.

Their statement was even more noteworthy;

“The retail investor has become a bit more of a believer, we don’t want people to get overzealous, if you will. This is controlled exuberance.”

Did you ever hear the term 'Dumb money'?

Well,

That is the term used in the industry for retail investors!

The reason they are referred to as dumb money is because the typical retail investor usually dives in at exactly the wrong time.

Now, dumb money just went 'all in' for stocks when the main index's are sitting at historically overvalued, overbought and over bullish extremes!

Good Lord,

There is no such thing as controlled exuberance!

Be aware, stock market tops look like this!

Now down to business.

TOMORROWS RISK EVENTS:

USD: Unemployment Claims.
EUR: ECB President Draghi Speaks. 
GBP: Halifax HPI m/m.
JPY: Final GDP q/q.

DOW JONES INDUSTRIALS

30 min

4 Hours

Daily

My Bias: market topping process completing.

Wave Structure: Impulsive 5 wave structure, topping in an all time high.

Long term wave count: topping in wave (5)

The DOW seems to have corrected higher today, the price move was overlapping as a correction should be and should be followed by a decline in wave '5' blue.

The wave form off the high is developing quite nicely so far although it is very early days in this downturn.

Initial support lies at 23927, the low of the previous wave 'iv' pink. A cross below this level will add weight to the short term bearish case.

The developing downside structure, coupled with the sentiment extreme I wrote about at the beginning,

All fit well with the idea of a topping market.

For tomorrow; watch for a decline into the trendline to complete a five wave structure off the high. At that point I will look for a three wave corrective rally to complete an Elliott wave signal off the high.

GOLD

30 min

4 Hours

Daily

My Bias: Long to a new all time high above 1827.

Wave Structure: Impulse structure to a new high.

Long term wave count: wave (3) above 1666.

GOLD has remained fairly flat today, which adds to the idea that wave '5' pink is still unfolding.

Support at 1260 is holding the price for now, but I expect we will see one more drop below that level into the lower trendline at 1255 which should complete the decline.

4hr momentum is now rising off the low and will shortly create a positive divergence form the price.

I will wait to see a clear bullish centreline cross to shift to a bullish stance in the short term.

By Edna Glynn


 

Enda Glynn

Author: Enda Glynn

Enda Glynn
bullwaves.com

Enda Glynn

I class myself as an Elliott wave trader now, but that's not how I started out though! It took me a long time and a whole lot of pain, to finally understand what drives the price and how to use Elliott Wave correctly!

I have been trading for years and I have tested every trading system and strategy under the sun! I used to pick entry points at random based on emotion or news events or something I heard on TV! It did not take long to destroy my capital! I have blown out my account balance before, and I had to start again,

from scratch!

Believe me, I am well acquainted with failure in trading! Im sure that the above scenario is pretty familiar to you too. We have all been there. About 10 years ago I discovered The Elliott wave Principle and its method of market analysis. Since then, I have spent years learning, testing and trading, using the wave principle as the backbone of my analysis. I even went to college to study macroeconomics and econometrics. I graduated with honours degree back in 2012. The financial market knowledge and statistical edge I gained after my degree added another level to my trading. The difference in my trading approach using the wave principle, compared to before, is like night and day.

The price started to move "my way" more and more often. The wave model, offers me a lens to view market action through, which no other form of analysis can do. Elliott wave analysis, helps me answer four key questions when I am contemplating a trade:

• What direction the price is trending.
• How far is this trend likely to go.
• Where can I enter a trade with the best risk reward ratio.
• And most importantly, at what point am I definitely wrong?!

The wave principle helps me improve my trade entry, tighten up my money management and in turn increase profitability. Seeing the waves unfold before your eyes is a very rewarding experience, It is almost like peering into the future! That is how the wave principle helps my trading, and that is why the wave principle will improve your trading. It took a long time to finally master Elliott Wave Principle. After over a decade of hard work, research and learning I can call myself an expert in the field. I regularly contribute to major trading communities at FXStreet, Forex Factory, Traders Planet. I am a chief Elliott Wave analyst at HumbleTraders.

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