Fed Delays, But Markets Bigger Than Policy

To many, the fact that the Federal Reserve pushed out its rate hike plan till later this year (and lowered the longer term NAIRU rate) came as a bit of a surprise. After all, employment, GDP and the stock market suggest that things are seemingly fine enough for a measly 25 bps hike. But, the Fed Delays, But Markets Bigger Than Policy

Fed in Focus, What do Elliott Waves Say

EURUSD We mentioned last week that the spike into Sustainable Bull territory was a concern, and certainly this week’s action makes it look like the euro bulls are in control. But, prices have failed the last seven times they’ve reached the 1.1500 resistance area, and we think that’ll be the outcome this time. We have Fed in Focus, What do Elliott Waves Say

What Could Go Wrong? Expect the Unexpected

Today’s stock investors take a couple of things for granted: Stocks always go up to new highs after falling in a bear market. That today’s current dividends being paid by companies will always continue. But, at major market lows both of today’s “easy to make” assumptions will not only be challenged but will be ridiculed What Could Go Wrong? Expect the Unexpected

Wolf’s Prey Elliott Wave Review

With the holiday weekend, I’ve been a little slow with the report. Let’s get right to the charts with our Elliott wave currency forecasts. EURUSD If the euro is going to find support, it should do it from just below current levels. The 1.1100 area has acted as support and resistance since back at the Wolf’s Prey Elliott Wave Review

Into Laszlo’s Trading Room: S&P 500 life after the stalling pattern

This weekly chart reviews the end of the stalling pattern, an almost totally ranging action where “bulls were not interested” in buying new highs anymore. It covered 314 S&P points to the north which is not bad considering the strength of gravity at this height. Studying the internal details of the structure might be a Into Laszlo’s Trading Room: S&P 500 life after the stalling pattern

Nailed It! Elliott Wave Forecasts Prove Correct

As we’ve written many times here, “Policy Divergence” is a US dollar bull fantasy. This week, as risk markets became unglued, the probability of a rate hike in September is around 30% based on the Fed Funds futures market. In fact, there’s now only a 50/50 chance of any rate hike this year. Add to Nailed It! Elliott Wave Forecasts Prove Correct

Not Exactly a “Great Fall” But…

If our Elliott wave currency forecasts are correct, look for more chatter about the Fed leaving rates alone in September. It’s long been our contention that the Fed really doesn’t care about serial bubble blowing or normalizing policy. If it did, it could have raised rates by a measly 25 bps by now, considering the Not Exactly a “Great Fall” But…

Elliott Waves Say Dollar is Humpty Dumpty

The initial reaction to Friday’s lackluster US job’s number was to buy dollars. But, that didn’t last long, and by the close it seems that more traders are warming up to the idea that the Fed won’t be raising rates substantially, even if it does something in September. While the commodity smash is in full Elliott Waves Say Dollar is Humpty Dumpty

December Not September for FOMC Says Elliott Wave Forex Counts

The Wolf likes to think individual traders have some great advantages. We can sit around in cash, only taking risk when it’s appropriate. I’ve heard trading described as fishing, a lot of time waiting around, and very little time spent reeling them in. Our focus tends to be laser-like when we see a clear opportunity. December Not September for FOMC Says Elliott Wave Forex Counts

Do Valuations Matter?

Today’s lofty stock market levels are predicated on the idea that zero percent interest rates (ZIRP) and low Treasury bond yields have made cash and bonds so unattractive that stocks are the only alternative. This is represented by the acronym TINA, or There Is No Alternative (to stocks). While it is true that lower interest Do Valuations Matter?

What Doesn’t Go Down – Elliott Wave Forex Counts

This week, let’s get right into the charts for our Elliott wave forex forecasts. EURUSD Last week we were looking for a slight dip in EURUSD followed by an upside reversal, and that’s exactly what we got. We were leaning on two facts:  1. Daily RSI hadn’t fallen into Sustainable Bear territory (lower grey zone), What Doesn’t Go Down – Elliott Wave Forex Counts

Dollar Reigns Supreme as Greek Can is Kicked

While Greek bondholders may have seen a reprieve, the euro didn’t this week. We’re going to lead off with the GBPUSD because it looks more constructive than EURUSD. Many risk assets rallied this past week, but others didn’t, such as junk bonds. The Wolf is still firmly in the camp of the Fed leaving rates Dollar Reigns Supreme as Greek Can is Kicked

As the Euro Churns: Elliott Wave Edition

A fund manager friend of ours is fond of saying that European politics has always been dysfunctional, and it will always continue to be. After last week’s dramatic OXI vote from Greek citizens, the euro was sold reflexively, without regard to the euro being a stronger currency without its weakest link – Greece. With the As the Euro Churns: Elliott Wave Edition

Into Laszlo’s Trading Room: S&P500 Bulls Not Interested

This week’s bar looks bad, so far, and looking at the short term charts there is a good chance it will remain that way. If it does, this week’s candle with the previous two bear bars would confirm the kick-start of the larger degree reversal, following the a completion of the diagonal pattern. The new Into Laszlo’s Trading Room: S&P500 Bulls Not Interested

Greece & Puerto Rico Influence Elliott Wave Forex Counts

With the unprecedented IMF default from Greece this week, and the tacit admission from Puerto Rico that it is bankrupt, it seems that this credit cycle has peaked. Both are similar in nature to the March 2008 insolvency of Bear Stearns. At the time, The Wolf was short financials (LEH, MER, FED, FNM, etc.), and Greece & Puerto Rico Influence Elliott Wave Forex Counts

Elliott Wave Currency Update Post Greek Default

As we said this weekend, a disorderly default seemed more likely. Whether or not the game of chicken between Greece and the troika ends in an official parting of the waves, or one side gives in (The Wolf believes one side will cave.) to the other’s demands, that won’t change our Elliott wave currency forecasts. Elliott Wave Currency Update Post Greek Default

How to Handle Stalled Elliott Wave Counts

Last week we were looking for a continuation of the rally in the euro, which failed to materialize this week. As I write, it seems the Eurogroup is closer to allowing a Greek disorderly default. And, while that’s a possibility, that’s not what we are focusing on. Instead of focusing on fundamental developments, or only How to Handle Stalled Elliott Wave Counts

Into Laszlo’s Trading Room: S&P500 Range and the Long Term Outlook

Although the halt to the bearish SPX decline at 2.072 is not a full disappointment to the bulls, it is worth taking a look at the larger picture to get a handle on the function of this muddled wave structure that overall moves sideways along a few weak breakouts to new highs.

Elliott Wave Forex: The Trendline Breaks

Why does former resistance become support when prices push above it? And, why does former support become resistance when broken? There is one reason that this “reverse polarity” has ALWAYS been the case – human psychology, which never changes. The psychology has to do with an overwhelming desire to “take profits rather than losses.” Think Elliott Wave Forex: The Trendline Breaks

NZDUSD Trading Signal Was “Against the Odds”

...echoing in the background noise of a casino

One core flaw traders make is when they use support and resistance levels, trend lines or Elliott waves alone – in other words, only “Context type” of ideas. Others traders fancy near term price action or candlesticks analysis alone, and they miss the forest for the trees by relying totally on the right side of NZDUSD Trading Signal Was “Against the Odds”

Euro Ready to Launch, Says Elliott Wave Currency Forecast

Sailors signal the launch of an F/A-18F Super Hornet

As recently as March, many were calling for parity for the EURUSD. One Forbes article stated, “Like a hot knife through butter, the EUR has managed to penetrate its long-term medium target with ease (€1.0762). It’s near impossible to stop a runaway train…” While the Forbes article wasn’t making a direct forecast, it reflected sentiment Euro Ready to Launch, Says Elliott Wave Currency Forecast

Creating Inflation & Elliott Wave Currency Counts

Mark Twain quote: It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so

This week the Federal Reserve’s mouthpiece at the Wall Street Journal John Hilsenrath penned a letter questioning, with an almost baffled tone, why people aren’t freely spending money. While I could write a list of reasons why they aren’t, suffice it to say that the economy isn’t nearly as good as those holed up in their ivory towers assume. And why is that?

Into Laszlo’s Trading Room: S&P500 Tipping Point

The SPX is like a balancing rock - rolling nowhere

Maybe traders have heard my trading advice along the lines, don’t take a momentum entry following an elongated range market. I say that because prices did “drag to new highs lacking any enthusiastic follow through.” This market is not for the faint of heart of trend traders for a good reason. The tight way the weekly Into Laszlo’s Trading Room: S&P500 Tipping Point

The “Most Hated” Currency & Elliott Wave Forex Counts

There’s little doubt the yen will ultimately end up in the currency dustbin of history - Elliott wave forex counts

We’ve made no secret of our detest for Japanese monetary and fiscal policies, and the ultimate outcome for the yen. There’s little doubt the yen will ultimately end up in the currency dustbin of history, along with the Zimbabwean dollar and Venezuelan bolivar (The Wolf correctly called for Venezuelan hyperinflation in January 2010.). In fact, The “Most Hated” Currency & Elliott Wave Forex Counts

Burning Yen & Elliott Wave Currency Forecasts

Coins exposed to fire - Traders were awfully comfortable taking home USDJPY long

USDJPY Back when writing as an analyst professionally, I was taught, “Don’t bury the lede.” In other words, start with the most interesting facet first, and that’s why we’re starting of with dollar/yen. It closed at a new high today, since its all-time low, and we’ve often pointed out the importance of Friday closes. Traders Burning Yen & Elliott Wave Currency Forecasts

What’s the Big Idea? – Part 1

What was the big trading idea in the past

Sometimes, when searching for trades, it pays to take a step back. If one formulates a valid long term investment theme, it can be used as a bias to trade for months (given confirming price action and momentum). An example would be the post we wrote about the Turkish lira back in October. That article What’s the Big Idea? – Part 1

Into Laszlo’s Trading Room: S&P500 Almost on the Go

Looking at the S&P500 chart we can consider the structure as an ending diagonal in Intermediate wave (5) of Primary [5] position. The diagonal has been under construction since October 2014 when price carved out the Intermediate wave (4) low. The S&P500 has started to respect every possible resistance from early December and has played Into Laszlo’s Trading Room: S&P500 Almost on the Go

Monetary “Quacks” & Elliott Wave Currency Forecasts

monetary mis-management

At the end of last week’s post, we lamented about the sorry state of monetary policy today. This week, we’re going to show a few charts that show some proof that the “adults have left the room” when it comes to prudent monetary policy. There’s only one tool the current crop of central bankers know Monetary “Quacks” & Elliott Wave Currency Forecasts

Gatsby’s Punch Bowl & Elliott Waves

McChesney: take away the punch bowl just when the party gets going

This week, we’ll get right into the Elliott wave currency forecasts, since we’ve ended this week’s piece with a bit of a tirade against the buffoons that control monetary policy today. EURUSD The euro fulfilled our forecast for a push to a new high this week, which completed a five wave rally. The push higher Gatsby’s Punch Bowl & Elliott Waves

Einhorn Blasts “Frackers” (Beneficiaries of the Junk Bond Bubble)

Today David Einhorn gave his presentation at the Ira Sohn Investment Conference. For those who aren’t familiar with the conference, it’s turned into an annual who’s who lineup of top investment minds; and, it’s for a great cause – pediatric cancer research. The title of his presentation was “Meet the Frackers (YouTube link).” In it, he Einhorn Blasts “Frackers” (Beneficiaries of the Junk Bond Bubble)

Combine Elliott & Wilder’s RSI For Clues

The Welles Wilder's RSI is a speed indicator that helps to pick the preferred Elliott wave count.

You’ll notice from time-to-time that we’ll have multiple counts on our charts. In fact, The Wolf likes to think more in terms of probabilities of counts, rather than either/or. For example, the top count will usually be 50-85% probable, with the top alternate 15%-50%, and the second alternate 5%-20%. Doing that has a couple benefits Combine Elliott & Wilder’s RSI For Clues

Into Laszlo’s Trading Room: SPX Failure Falls Short

The first chart today is from our April 13 S&P500 “sandwich” post, and it shows the actual path prices traveled in the last two weeks or so. This close match demonstrates how powerful Elliott’s wave principle is when it comes to understanding the price action context. Nevertheless we are showing this chart for two other Into Laszlo’s Trading Room: SPX Failure Falls Short

We’ve correctly called the early week USD weakness, especially against the pound and Kiwi. We tweeted out a bit earlier today that we’ve moved flat ahead of the US GDP announcement and Federal Reserve meeting that begins tomorrow. There’s still plenty of room to the upside under bullish Elliott views, but sometimes it’s just about managing risk and avoiding volatility. We’ll be looking to be dip buyers on GBPUSD, AUDUSD and NZDUSD.

When It All Goes According to Plan

Last week's Elliott wave currency forecast was accurate

We started last week with a question, “What’s more important, Signals or Elliott waves?” Going into the week, we didn’t write, “this week we’re super confident of the outcomes,” but sometimes, you’re just in the zone. We were able to catch both the early week dollar rally, using EURUSD, and the late week dollar decline When It All Goes According to Plan

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Use the Force, Luke

Always adjust or the golf club shape trend day will grind you

I see this mistake all the time – from runners, and traders. You probably have observed the same in other type of activities as well. The proverbial salmon swimming upstream. Let me explain. I ran the Vancouver Sun Run 10K this past weekend, and there was a vivid reminder of being aware of your environment. Use the Force, Luke

Are Signals or Elliott Waves More Important?

Our weekly column that shows our Elliott wave currency forecasts is step one in our trading methodology – the Context. Steps two and three are Momentum and Signal. You have to start looking for opportunities somewhere, and for us, we build “themes” and weekly opportunities off of daily charts. But, just because we’ve generated an Are Signals or Elliott Waves More Important?

Into Laszlo’s Trading Room: The S&P500 Sandwich

Illustration: the S&P500 is stuck between support and resistance

Monday, 0:23 a.m. The S&P500 has not been to a new high since February 25; that is to say, for 31 trading days now. Despite the all-time-high drought, we have not observed too much bearish activity; the deepest spot formed less than a 4% decline than the 2,120 SPX peak. When the market is so firmly Into Laszlo’s Trading Room: The S&P500 Sandwich

Blindsided by the Housing Bust? Don’t Miss the Junk Bond Bubble’s

There’s a reason The Wolf continues to harp on the Junk Bond Bubble, and the Dosimeter, which lists over 100 defaults now. That’s right, I’ve capitalized it, turned it into a proper noun, hashtaged it to death and won’t stop talking about it. That’s because it’s the SINGLE MOST IMPORTANT ISSUE for this next down cycle, whenever it Blindsided by the Housing Bust? Don’t Miss the Junk Bond Bubble’s

Currencies At a Crossroad

Potentially look for opportunities in some currency crosses

All of the pairs don’t agree on the near term path for the dollar. At a point in time like this, it’s best to view each of the pairs individually (as opposed to a dollar theme), and potentially look for opportunities in some crosses (EURGBP & CADJPY). Early week action may confirm several counts, and Currencies At a Crossroad

Fugazi or the Real Deal?

Is the dollar decline is a head fake or the real deal?

The US dollar’s trend isn’t so unanimous anymore, is it? We’ve pointed out ad nauseum over the past several months that the Fed may balk at raising rates, may raise them awfully slowly when it finally does, and that a Greek default doesn’t have to mean a weaker euro. This week’s manic/depressive action in currency Fugazi or the Real Deal?

Triangulation Continues For USDJPY

On Thursday last week The Wolf sent a Tweet about the clear three wave decline in USDJPY. And, over the weekend we mentioned an “aggressively bullish” posture. The USDJPY has yet to push higher, and it has been triangulating further, which we show as the alternate count below. Regardless of which short term count is Triangulation Continues For USDJPY

The Great Euro Collapse

A photo of rubble - the damage is the done the EUR has collapsed

The euro refuses to stage any rally at all. In fact, most participants have become extreme in their thinking: Greece will exit the EU causing banking failures, deflation has ensnared the ECB and the US has “policy divergence.” Here’s the thing though, each and every one of those thoughts was also true six months ago The Great Euro Collapse

Time For Business Insider to Update Its Numbers

David Einhorn follows a second "guy"

We would like to welcome our latest Twitter follower, the esteemed David Einhorn who is the founder and President of Greenlight Capital, a long/short hedge fund. We are honored, humbled and motivated to continue to strive for excellence through promotion of our Context, Momentum, Signal trading approach for all of our Twitter followers, but David’s addition Time For Business Insider to Update Its Numbers

Dow Theory Non-Confirmation

Dow Theory was developed by Charles Dow, Robert Rhea and others as a way to determine the health of a particular trend. It’s track record of calling tops and bottoms is quite good using only the Dow Jones Industrial Average and the Dow Jones Transportation Average. Basically, the theory is that if both averages are Dow Theory Non-Confirmation

Impulsive break – S&P 500 chart update

A broken security key on the table.

Previously we had discussed the key support of 2,085 on the S&P500, and 208.78 on the SPY ETF, which was broken on Friday. Then prices tested resistance and confirmed the bear breakdown during Monday’s session. Prices have broken the level that divided the bull and bear scenarios, and so it’s now resistance. Tuesday’s drop through the new Impulsive break – S&P 500 chart update

Secrets To Better Trading – Video

Would you like to become a professional trader or just improve your results? What is your idea about trading for living? The mindset behind a successful trading career might surprise you. Process is more important than prediction. Repeatable work, that you do again and again, is the secret sauce of the trader. So, before you Secrets To Better Trading – Video

Clear 3-Wave Decline on 60-Minute Chart For NZDUSD

NZD banknotes

Here’s our Elliott wave currency forecast on the hourly chart for NZDUSD: I wanted to show some additional color on the kiwi, because we feel the rally has a little room to run. Here’s the details: First, we can see rallies a, c and a are all in five waves. Declines b, (x) and b Clear 3-Wave Decline on 60-Minute Chart For NZDUSD

The Dollar Wrestles for Control

EURUSD walking on the rope - illustration by Laszlo

Thursday’s reversal in the dollar from support leaves our larger dollar sell-off call at risk. Many longer term players we’ve spoke with have “taken advantage” of the recent dollar sell-off to get bullish again. Maybe we’re wrong here, and the low isn’t in place, but we see an ending move even if the dollar has The Dollar Wrestles for Control

What’s Wrong with the ‘Good’ Deflation Argument

Popular consumer product advertisements on deflating baloons

Great investors, and great traders, often ask the question, “What if I’m wrong?” A trader might ask, “Where should I put my stop loss?” While a great investor might ask, “How will my portfolio (60% stock 35% bond and 5% cash) perform if interest rates rise 1%, the S&P falls 20% or a recession occurs?” What’s Wrong with the ‘Good’ Deflation Argument

SPX – Still Has the Momentum

A photo of a sailing ship with the Statue of Liberty in the background

The SPY (SPDR S&P 500 ETF) was able to poke into the green “sustainable bull momentum area” not just once but three times. I bet many traders see the gradual increase of the last two days as a wedge or ending diagonal, just like the RSI does; but, at this high of an RSI reading, it does not mean more than a 1-2 days long correction, in all probability.

A Sideways Week Means Dollar Pullback Can Continue

A sideways, consolidating market usually means continuation. Here’s the tough part. Both the daily chart, and 240 minute charts have been moving sideways. The daily charts would suggest sideways equals continuation of the uptrend, but the shorter term charts suggest continuation of the budding uptrend. Generally we’ll defer to the larger degrees message, but in A Sideways Week Means Dollar Pullback Can Continue