Short Term Trading Member Forum

[techcharter]

Messy DOW, SPX, and NASDAQ

These major indecise have proven difficult for both bulls and bears to count E-waves. Some investors throw out tools when they don't apply without trying to figure out why the model doesn't appear to be working. Let's take a few steps back for a moment to figure out why things are working better for industry indexes and not the broader markets. I'd like to entertain the idea that money is rotating within the major market indexes to give a very choppy chart. When looking at sectors, the waves have more clarity. Maybe trading the sectors with the clearest wave patterns will be the most profitable for now. Trade the broader markets when the money rotation has slowed down.

Take a look at the bank index. There is a very clear bear market wave the month of April '04 into early May. Since then a clear ABC (zigzag) has unfolded, and is near a turning point. The importance of the banks is that it represents perceived financial structure strength. Without a sound structure, the rest of the business world become a non-issue.

http://stockcharts.com/gallery?$BKX

The SOX has fairly clear bear market waves.

http://stockcharts.com/gallery?$SOX

The Airlines chart doesn't show the waves as clearly, but shows overhead resistance at the 50 day moving average. Also bearish is the large retracement of the rally that started in Spring '03

http://stockcharts.com/gallery?$XAL