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European Debt: An Elliott Wave Perspective

Market Overview – June 2, 2008

June 03, 2008 at 6:44 pm | Trade Artist | Comments 0
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Just like we predicted, the Qs traded down to 49.00 (48.96 to be exact), bounced off the bottom channel line and closed right above the 20 period moving average. Does that mean the down-move is over? My guess is no. We may see some sideway trading for the next couple days or a small bounce to digest the decline, but we should end up testing the March lows before this fall is over.
QQQQ June 2, 2008

One reason we feel so strong about the market heading south is based on the chart below. Here we have charts for most of the big sectors in the market (click on the chart to enlarge). As you can see not all sectors are participating. Energy and Tech have been driving the bear market correction while banks, brokers, homebuilders, insurance, retail and even gold have been falling. If this were not a bear correction we would probably see more precipitation in the up-move. We don’t like to bring in fundamentals, but as we saw today with GM shutting down four plants, the fallout from the credit crisis has much further to go before we can expect to see any recovery in the economy. Not to mention we’re coming into the summer doldrums which is typically the lightest volume and choppiest time of the year in the market.

Sweet 16 June 2, 2008

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