Market Briefs & Sentiment Outlook (MBSO)
Reported by Tony Carrion

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December 4, 2017

 

 

   

 

  

 

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US Stocks - 2017 Wind Up

With the Christmas holidays a few weeks away, the question for the stock market is whether it'll be Santa or the Grinch who shows up.

 

 

The Elliott Wave pattern for the Wilshire 5000, the broadest measure of US stocks, suggests a fifth wave pattern is coming to a conclusion. Whether it is concluding wave (5), or only wave ((v)) of 3 is still to be determined. Technically, the Rate of Change (ROC) shows weakening momentum, despite the press to new highs. The weekly RSI is also deep into overbought territory. Taken together, it suggests an inflection point should be fast approaching.

 

 

We discussed in a previous MBSO the depth of put interest in the VXX, an ETF that tracks the S&P 500 VIX short-term futures, noting at the time the excessively high put/call ratios at the near-the-money strikes. It suggested fear of a meaningful market decline was virtually non-existent. Since then, the VXX has traded even lower. However, from the last high of significance in August, a clear five wave decline pattern has unfolded, and a sharp bounce followed. While there's no hard evidence the bottom is in place, the wave pattern suggests we sit up and take notice. If it continues to rally higher, driven in large part by short-covering to be sure, then it would indicate stock prices are headed lower.

 

At a minimum, risk levels should be considered as rising, and a meaningful turn lower this month highly probable.

 

You can follow the intraday and daily Elliott Wave analysis of US, European and Asia/Pacific stocks with a risk-free subscription to the Stock ProServices offered by Elliott Wave International.  Click for more information.

 


For intraday and daily Elliott Wave forecasts of US, European and Asian stock markets, we highly recommend the ProServices offered by Elliott Wave International where I am an analyst.

 

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