Elliott Wave InternationalmyEWISocioniomics.Net
Home > Stocks
Stock Market Bounce: Our Near-Term Call
Put the immediacy of the Short Term Update on your side
By Bob Stokes
Wed, 06 Jun 2012 19:15:00 ET
Add to Facebook Add to Twitter Email to a friend Printer Friendly Get the RSS feed Add to more social media services
Get investable insights sent to your inbox at least once a week – for free. Challenge the way you think about investing with The EWI Independent. Privacy

On June 1, many market observers blamed the Dow's 274-point decline on Europe. And they worried that Europe's financial woes would lead to more steep losses this week.
 
But on Monday (June 4), the Dow was marginally lower while the NASDAQ and S&P 500 actually ended higher. After that day's close, our Short Term Update said
 
Our view is that the stock market is oversold and under-loved on a near-term basis, so a countertrend push would be a natural way to relieve some of the downside pressure...
 
Just the previous evening, CNBC had a Sunday night special program, "Markets in Turmoil." Its tone was urgent and negative.
 
But our near-term analysis indicated otherwise.
 
Sure enough, the main indexes closed higher on June 5 and kept rising on June 6.
 
But what about the decline since May 1 which whopped off over 1,150 Dow and 130 S&P 500 points? Did the Short Term Update prepare subscribers for that?
 
Well, let's see what the Short Term Update had to say back on April 27:
 
The rally should turn down early next week...
 
Global bourses remain relatively weak versus the U.S. market and there has been a NYSE tick and breadth divergence since Wednesday's close, which is consistent with a rally that is nearing an end.
 
Indeed, the Dow Industrials hit a May 1 intraday high of 13,338.70 before turning lower.
 
And just one day after that Dow top, the May 2 Short Term Update noted
 
Yesterday was one of those days where we looked at stocks in the funhouse mirror and something appeared amiss. The main indexes opened flat-to-down until about 10:00am Eastern when a furious rally carried everything higher. Volume jumped as did the advance/decline ratio, but the surge petered-out at about noontime and the indexes pulled back into the close. So too did the internal measures of strength which...made lower highs. When it was over, the DJIA had carried to 13,338.70, a new recovery high above its April 2 high (13,297.10), but no other stock index confirmed this high. In fact, the Russell 2000 actually closed down on the day. It was one of the most widespread inter-market non-confirmations that we can remember.
 
That analysis speaks for itself.
 
As for present market action: the Short Term Update did expect a relief rally and that's what happened. But are we surprised by Wednesday's (June 6) 286-point surge higher? Not at all. Read this from the May 9 Short Term Update:
 
Keep in mind that bear markets unfold faster than bull markets and countertrend rallies tend to be sharp upward moves that, while large in terms of points retraced, are relatively brief in terms of time.
 
You've seen just how valuable our Short Term Update has been to our subscribers during this time of volatility.
 
Now you can learn what we see unfolding next. And you can do so risk-free for 30 days. 

Position Your Portfolio for the Next Major Market Move 

See What We're Seeing
 
You'll get more insights, more useful charts and more timely analysis from EWI's Financial Forecast Service than any other financial publication.
 
Here's what you get with your risk-free 30-day trial:
 
1) Prechter's new, 21-page Elliott Wave Theorist

2) Near-term outlook via our Short Term Update

3) Latest big-picture analysis in the NEW June 2012 Financial Forecast

All of this plus a June 6 Special Report from Elliott Wave Theorist and Financial Forecast>>

 

 

Tags: Elliott wave, investment decisions, investor psychology, market forecasts, Short Term Update, stock indexes, technical analysis, technical indicators, Traders
Rating: - based on [22 rating(s)]
Rate this content:
  
 
EWI's Event Calendar
May 13-16     

Las Vegas Money Show
July 10-13       

Freedom Fest Conference


Stay Ahead of the Trend in U.S. Stocks

FFSEWI's Financial Forecast Service equips you to think, trade and invest independently from the crowd. Here's what you'll get, risk-free:
  • Short Term Update -- Intensive forecasts and analysis 3x/week for U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Financial Forecast -- In-depth, intermediate-term perspective on U.S. stocks, gold, silver, bonds and the U.S. dollar.
  • Theorist -- Bob Prechter's monthly big-picture insights.
Put the Financial Forecast Service on your screen in minutes, risk-free>>

Most ReadHighest Rated
Free Video Course
Learn the Why, What and How of Elliott Wave Analysis

Financial media use news and economic events to explain market moves. Steer clear of this misguided approach. Take part in the Elliott Wave Crash Course to learn what really moves the markets.


The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.