Many traders will be happy with the short profits taken off the table in last week’s sell-off. Most sectors were sold down, and those who took action as the situation unfolded, likely saw a healthy boost to their trading account.
In fact, of the attendees in this week’s TradingKey session, more than 70% were active in the market. If you were trading anything, from CFD’s to Options, Elliott Wave opportunities were abound and the direction was particularly clear on a number of levels. Furthermore, for every long Elliott Wave signal on International markets, there were five times as many selling opportunities, with fundamentals clearly in agreeance. So where to from here?
As always however, markets never move in a straight line. We’ve seen a straight 6% fall for the Dow in the second half of last week and bargain hunters are likely to show a little further support. This week could just be the week for a little short-term relief. It constantly amazes me what a short-term memory investors so often have. Even as the financial world continues to spiral into oblivion, investors are willing to buy in response to any short-winded words of confidence from the US Federal Reserve or European financial leaders.
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From this angle, it appears that funding costs for European Banks will continue to grow and it’s not so much of an ‘if’ for a technical Greek default, but more ‘when’. This tone was set most recently by expressions from US Treasury Secretary Timothy Geithner and ‘The Man Who Broke The Bank’, George Soros with comments at the annual meeting for the IMF in Washington. The responsibility lies further than Greece, it lies with European policy makers and is likely to result in further sell-offs as we move into the final portion of the Elliott Wave 4 sell pattern across so many stocks on international markets. Even with this knowledge of the likely European melt-down, the coming week is likely to see buying across the board. A clear indication will be volume. Although volumes will likely remain light, the week ahead is unlikely to show the sort of short opportunities we experienced last week.
So where to from here? Well, if you didn’t make the most of last week’s slide, there is a good chance the opportunity will arise again soon. This week is likely to see a little buying as we see re-assurance slip through to short sighted and forgetful investors. The charts tell the story, so don’t accept a happy ending any time soon…
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