Squawk Morning Briefing: Will A Romney Rally Last?

We’re not taking sides in the upcoming U. S. Presidential contest but one doesn’t need to take be partisan to recognize the market realities. The market believes that Romney is good for business and Obama is not. So it shouldn’t be a shock that as Wednesday night’s debate appeared to be coming to a close with the challenger looking strong and the incumbent having appeared to struggle to convey his points U. S. equity futures began their sharpest rally of the overnight session. The rally continued as news outlets came out an pronounced Romney the winner as many earlier futures buyers suspected.

Bonds sold off modestly at the same time, but not nearly to extent one would expect if this rally were to continue, raising the question of whether it will last. While events may form the catalyst for market moves, the wave structure is the lens we use to assess whether that catalyst is creating a change in trend and how far a trend may go.

Our analysis continues to view the decline of the past several weeks to be corrective. Therefore, the most likely case is that we go up after the correction is complete. If the rally continued from current levels up to new highs then we would likely view the triangle presented in today’s DJIA video as complete and a fifth wave up to be in progress. However, we would need to break out above levels cited in the video to begin confirming the move. Otherwise, we would need to view the correction as ongoing and the overnight bounce just one more change in direction during corrective chop.

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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:

• What price levels and wave motions would confirm an expected move?
• What price levels would make an alternate scenario more likely?
• What technical indicators should be watched throughout the day to interpret wave action?
• What intermarket movements merit special attention to understand likely price trends?

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From time-to-time when circumstances warrant, Squawk will present analyses of other markets that help interpret wave action in a covered market. For example:

• If S&P 500 and Dow counts are ambiguous and NASDAQ behavior helps identify the likely next move then NASDAQ analysis will be presented.
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About the Analysts

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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