Volatility Delivers Wake-Up Call to Financial Sphere

By: Joseph Russo | Sat, Aug 4, 2007
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Likely resulting from decades of imprudent financial engineering, the uncertainty-surrounding discovery as to the potential extent of collateral damage from such shenanigans remains immeasurable and unknown.

Similar to those engineers about to embark upon months of intense investigation in attempt to determine cause of the sudden bridge collapse in Minnesota - the omnipotent financial sphere is just beginning to access whether or not the minor structural fractures, (which market volatility has so blatantly revealed) could possibly morph into a sudden and total collapse of similar dimension.

The Week in Review:

Highlighting the NASDAQ 100

GENERAL EQUITY INDICES THREATEN NOTABLE BREAKDOWNS GOING FORWARD

Friday's dismal weekly close did nothing to improve upon the numerous technical underpinnings that were riding on last week's performance.

Although the NDX broke down below last week's trendline, we graciously offer it a second such boundary to prove itself in the week ahead.

The low close beneath levels of the past seven weekly bars, has evoked a "sell-signal" basis the good old-fashioned 4-week rule. (John Murphy's Technical Analysis of Financial Markets)

Breadth stinks quite frankly - as all of the major Bullish Percent Indices (including the Dow's) have flagged sector-wide sell signals upon significant reversal breaches below their overbought 70-levels.

Despite capitulation-optimism surrounding high VIX/VXN readings relative to recent years, historically, the VIX becomes contrarian-bullish at levels above 30. Still a ways to go...

Apart from all of the plausible doom and gloom, longer-term uptrends remain firmly in tact, and at some point, a major reaction rally will prepare for take-off.

Although one should maintain general levels of optimism (after all, the bull is NOT dead yet) one should also be prepared for the absolute worst.

At the pilot's request, please keep your safety belts securely fastened, and your seat backs in their standard upright positions.

POST 2002 - IS VOLATILITY ATTEMPTING TO RETURN TO HISTORICAL NORMS - AGAIN!

Such question will be answered in due time, and will be contingent upon success of the financial spheres fresh layers of adopted rescue attempts.

In the interim, we continue our own brand of "business as usual." The chart below documents trade triggers, and recent price target captures from Elliott Wave Technology's Near Term Outlook.

For active traders of all time-horizons, there is no better road map for navigating markets than the Near Term Outlook.

To our knowledge, no mechanical trading systems or algorithms can anticipate directional moves with the agility, speed, and precision rendered by our dynamic method of short-term forecasting.

One may revisit "Navigating Near-Term Volatility" for a refresher on just how we forecast and anticipate critical market turning points.

That said - Let's see how the rest of the majors are holding up...

MARKETS AT A GLANCE

INDEX TRADERS EDGE Vol. 9

U.S DOLLAR

DOW JONES INDUSTRIALS

After a brief peek above last weeks sharp downtrend line, the Dollar reversed sharply lower on Friday - threatening to retest multi-year lows.

The Dow (hands-down market leader since 2002) gave up further ground last week - closing dangerously below its former trading range. Although still overwhelmingly bullish longer-term, the Dow continues to show signs of stress.


GOLD

S&P 500

Last weeks inside compression bar for Gold, has potential to set-off major fireworks in either direction for the week ahead. Watch the US-Fiat Dollar for clues, and hold on to your hats.

The S&P looks downright ugly! Since it has destroyed its previous two-uptrend lines, we shall grace it with a third, and "last chance" boundary to maintain any semblance of upward trajectory.

That's all for now - Should readers have interest in obtaining access to Elliott Wave Technology's blog-page, kindly forward the author your e-mail address for private invitation.

Until next time ...

Trade Better / Invest Smarter...

 


 

Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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