Squawk Morning Briefing for 4/10/2014

Good morning. It’s David here. Kevin is filling in for me on the U. S. equities video today. Our schedule is still impacted by some Family health issues. We will once again put out our briefing for Friday this evening. Kevin will have a more fulsome look at S&P 500 but our views are not always identical so I’ll share a few quick observations.

1. Equities have, indeed, rallied from the area of support we discussed Tuesday morning.  Taking some off ended up being a good idea.
2. Notice how the first leg up from Tuesday’s low is sharp, yet the second leg up on Wednesday began much more slowly.  Even now that it has extended the slope is lower so that it hasn’t yet broken out of a channel.  This is usually a signal of a correction.  However, over the past few years many moves back up from breakdowns have begun this way.  What turns out to be a third wave just grinds upward rather than shooting upward.  A clear break above the channel we discussed on Wednesday would suggest we are turning up.  Continuing to grind up within the channel might turn out to be another frustrating, “stealth” impulse upward.
3. If prices turn back down from current levels or near current levels then however much longer the second leg up is, it will be left with a three-wave appearance.  That would be only corrective and suggest another leg down.  There are reasons to think this could happen, including the 61.8% retracement level as well as the fact that Wednesday’s bounce was on low volume.  Nevertheless, bears need to prove their case here otherwise another “stealth” rally could be in progress.

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Elliott Squawk delivers thorough market preparation every morning in time to take action during the trading day. By combining up-to-the-minute futures activity with traditional end-of-day analysis from cash indices, you receive analysis based on the latest conditions as the trading day sets to open. Each issue of Elliott Squawk goes beyond traditional Elliott Wave analysis because we recognize that trading Elliott Waves is much more than just looking at the most likely current count. Squawk will prepare traders to assess the market action as it unfolds by answering questions that any Elliott Wave trader should consider:

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Kevin McEwen and David Starr are best known to First Wave chat room participants as Kevy99 and Managematics and by their reputation for their Elliott Wave counts that have predicted market turning points. Kevin has been counting Elliott Waves for 28 years, successfully forecasting market moves in virtually every financial environment. David brings together talents in financial market analysis and software development to his wave counting. He has authored many of the studies used by First Wave Traders as well as a number of proprietary studies to aid in counting waves.

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